No new Keydata levy but firms may see bills rise

The Financial Services Compensation Scheme says it is unlikely to raise an additional industry levy to cover the cost of Keydata claims.

However, it says a recalculation of existing levy payments will mean some firms might see an increase in their levy to cover other firms’ share reducing.

The FSCS updated firms last week on tariff data resubmissions on which the £326m interim levy to cover the cost of Keydata claims was based.

It was thought earlier this year the FSCS may look to raise a further levy on top of January’s £326m levy.

FSCS chief executive Mark Neale says factors such as the amount of recoveries and the total paid in compensation will determine whether an extra levy is needed.
Firms will be notified of any levy refunds or additional charges by the end of the year.

Neale says: “We do not expect to need any further funding in respect of Keydata on top of the £326m levied in January. But this is a zero-sum game so there may be a need for some firms to contribute more if other firms’ share reduces.”

The FSCS changed the way it calculates adviser levies earlier this year from the number of registered individuals at a firm to the amount of eligible income it generates.

Many advisers complained after seeing significant increases in their levy, due to mistakes they made in submitting their tariff data.

The FSCS and the FSA sent firms an open letter in February telling them they could resubmit tariff data for 2010/11.

The FSCS has set aside £30m to repay firms who have been overcharged on their share of the interim levy.

Paladin Financial Services managing director Tim Purdon says: “I wonder when the well will run dry, as IFAs cannot go on paying these interim levies forever.”