MPs and mutuals have joined advisers’ calls for an urgent review of Financial Services Compensation Scheme funding.
Labour MP and Treasury select committee member George Mudie said in a committee evidence session this week it is time to re-evaluate FSCS levies.
In November, the FSA postponed a review of the FSCS’s funding model because of upcoming changes to the regulatory framework.
Speaking to Money Marketing after the session, Mudie said the review must go ahead.
He said: “If the FSA cannot do it itself, it should pay for another independent body to do it.” Mudie added that regulatory fees and levies should be agreed at the start of the year and cleared with Parliament.
He said: “If levies are made, they should get ministerial approval. It is too much of an open chequebook for the regulator, which seems to totally disregard the size of firms in its calculations.”
Nationwide chief executive Graham Beale and Co-op chief executive Neville Richardson told the committee that as the FSCS’s deposit class payments depend on the size of retail deposits rather than risk, mutuals are paying more to compensate people than riskier institutions in the class.
Richardson said: “Our deposits are greater than the money we lend out and that makes us lower-risk. Conversely and quite bizarrely, in compensating for the Icelandic failures and so on, we have to pay more and that just seems wrong.”