Lowes Financial Management managing director Ian Lowes has hit out at Hargreaves Lansdown founder and executive director Peter Hargreaves for blaming structured products for the significant hike in the FSCS levy.
In an open letter to Hargreaves, Lowes says while he supports Hargreaves’ claim that the levy hike is unfair, he is wrong to cite structured products as the main offender.
Last month,The Financial Services Compensation Scheme announced a £93m interim levy on advisers. The levy includes FSCS compensation costs of £86m, mainly to compensate Lifemark investors, and management expenses of £7m. In addition investment fund managers are to be billed £233m – meaning the total FSCS interim levy is £326m.
Hargreaves Lansdown chief executive Ian Gorham called for a review of the FSCS after it was hit with a £3m levy bill earlier this month.
Lowes says: “The collapse of Keydata was not caused by structured products, rather it was precipitated by the secure income bonds and secure income plans, US life settlement schemes, which had no underlying defined measurement and so were not structured products.”
Hargreaves has attacked structured products on a number of occasions in the press. Lowes says advisers are required to have a broad range of knowledge across a number of subjects and to understand the whole of market, including structured products.
Lowes says: “May I suggest that you spend a little time perusing www.StructuredProductReview.com, or one of the other resources covering the sector, where you will find not only the answers to your doubts and fears but a vast array of solutions to complement your clients’ portfolios of investment needs.
“The returns achieved in 2010 by the type of structured / defined investment utilised by many IFAs prove that those who discounted the sector out of hand may have served their clients better by taking a more open minded approach.”