View more on these topics

‘No obvious solution’ on FSCS reform

FCA logo glass 620x430

The FCA has said that there is “no obvious solution” that will please all parties on Financial Services Compensation Scheme funding as it appeals for advisers and the wider industry to feed in to its ongoing consultation.

In a special edition of its ‘Regulation Round-Up’ series, the regulator highlights a number of areas it is focusing on as it looks to improve how the FSCS is paid for.

While the regulator acknowledged that the current FSCS model was imperfect, it says there is “no obvious solution” to keep all stakeholders happy.

FCA director of policy David Geale says: “The FSCS plays a key role in ensuring that consumers can use financial services with confidence, but this comes at a cost to the industry. We know that both the size of the cost and its allocation between firms carrying out different activities are controversial topics.

“There is no obvious solution that will satisfy all stakeholders – if there was we would already be using it. However, the system can certainly be improved, and that is what we are aiming to do.

“We are keen to have a wide-ranging debate of the issues and to hear from as many stakeholders as possible.”

The FCA published its long-awaited consultation into FSCS reform in December. The regulator is considering whether to risk-rate firms’ FSCS contributions and increase contributions from providers.

The FCA is also weighing up intervention in the professional indemnity insurance market, for example through introducing mandatory wording on statements.

Geale says: “The Financial Advice Market Review recommended that we look at the professional indemnity insurance market for adviser firms, and we are currently doing this. Our starting position is that the FSCS should be the fund of last resort, to be called upon only once other sources such as indemnity insurance have been exhausted. However, in many cases we have found that insurance does not perform that role if a firm becomes insolvent.”

“We are interested in exploring whether the FCA should seek to define in more detail the kind of PII that firms should be required to hold, and the impact on firms and consumers if we did this.”

The consultation closes on 31 March 2017.

Recommended

FSCS-Piggy-Bank-500x320.jpg
7

PI and providers in firing line as FCA publishes long-awaited FSCS proposals

The FCA has released its long-awaited consultation on reforming the Financial Services Compensation Scheme. Among a number of options, the regulator is considering introducing mandatory wording on professional indemnity insurance policies for personal investment firms. The consultation also contains further options for strengthening PI cover, including ensuring policies provide cover for any FSCS claims, restrictions […]

Board-Room-Meeting-Room-Business-700.png
8

FCA calls industry talks over FSCS provider contributions and PI bill merger

The FCA is continuing to discuss the possibility of a new centralised compensation pool to replace the Financial Services Compensation Scheme as well as how providers should contribute to the lifeboat fund. Money Marketing understands that since the FCA released its long-awaited consultation on FSCS funding reform in December, it has continued to schedule roundtables […]

4

Risk-based FSCS levy will cause advice firm closures, adviser trade body says

Adviser trade body Libertatem has criticised the concept of a risk-based Financial Services Compensation Scheme levy, saying it will threaten the financial stability of advisers’ businesses. The FCA’s consultation on the future funding of the FSCS last month confirmed a risk-based levy is under review. Under a risk-based levy, firms could be eligible for a discount […]

Sticking to valuation discipline when investing in China

Journalist Alexis Xydias discusses the opportunities – and potential pitfalls – of investing in China with Artemis fund manager Peter Saacke. With Peter holding significant positions in China in the Artemis funds he manages, journalist Alexis Xydias quizzes Peter on the risks of investing in Chinese stocks – including over-valuations, margin trading and financial reporting issues. Click here for video

How to balance bottom-up with top-down research in constructing multi-asset credit portfolios

In this short video, Azhar Hussain, head of global high yield at Royal London Asset Management, explains how his team balance bottom-up with top-down research in constructing multi-asset credit portfolios. Watch the video in full The value of investments and the income from them is not guaranteed and may go down as well as up […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Of courser there is no “obvious” solution !

    The FCA are simply paying lip service to this, as currently, its damn near perfect from their side of the fence

    But all I say…. please for all you hold dear…. DO NOT, get/force PI insurers to include mandatory wording.

Leave a comment