Mark Hoban says those with complaints about cross subsidisation in the funding of the Financial Services Compensation Scheme will be grateful for it when their sector faces significant losses.
Speaking at the Treasury select committee session yesterday, the Treasury financial secretary said the argument for not paying for failures outside a firm’s sector is “seductive”.
He said: “It is very easy to say, ’my sector should not be hit now for the levy because it is not my problem’, but the time may come when it is a member of that sector who have to pick the bill and they will be grateful for some of the cross subsidisation on offer.”
“I think this is a very difficult balance and I understand the concerns and I have had letters from building societies, IFAs, investment managers all uncomfortable that somebody needs to pick up the cost of failure. Actually it is important I think for consumer confidence that the cost of failure is picked up somewhere.”
He told MPs he believed it is important FSA fee payers feel they are getting value for money and that the provision for the National Audit Office to look at whether the regulator is delivering this value was “underused”.
When TSC chair Andrew Tyrie asked Hoban if he would think about further ways of achieving value for money beyond engaging with the NAO, he agreed.
Hoban said: “It is something we need to think about very carefully, it is not something we can leave until the regulatory structures are in place.”