Newly-merged adviser trade body Pimfa is calling for the FCA to change how it plans to calculate the Financial Services Compensation Scheme levy, to take discretionary fund managers out of its remit.
The FCA’s consultation on FSCS funding reform said all firms falling under its investment provision funding group are classiffied as product providers and so will be required to contribute to the levy in future.
However, Pimfa, the trade body borne out of the merger between Apfa and the Wealth Management Association, points out that, despite falling into the same class, DFMs are not product providers and should be exempt from the levy.
In its feedback sent to the FCA on 15 January, Pimfa regulation director Ian Cornwall says the FCA assumes discretionary businesses usually comes from referrals from advisers, which is not always the case.
Cornwall says Pimfa is supportive of the planned 25 per cent contribution product providers will make towards the FSCS, but urges the FCA to modify the “flawed” proposals that mistakenly categorise DFMs as product providers.
He says it is “wrong and unfair” to put non-product manufacturers in the levy class for the purposes of the FSCS and that the FCA can easily identify which firms are receiving income from clients on a discretionary basis.
Speaking to Money Marketing, Cornwall says: “At the moment the FCA captures all firms within the investment provision class regardless of whether they are product manufacturers. We support [the FCA] proposals but we don’t support the way they have done the engineering as firms that provide discretionary services to retail clients are not product manufacturers.”
The FCA’s consultation on its proposals for FSCS funding review closes on 30 January.