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Providers snub FSA offer of levy summit

Product providers have rebuffed two FSA offers to hold negotiations on the Financial Services Compensation Scheme levy crisis hitting IFA firms.

FSA managing director David Kenmir sent a goodwill gesture to product providers, saying the regulator was willing to meet and discuss the levy dilemma faced by IFAs.

But the FSA says there has been no response from any firms since the offer was made at the beginning of the month.

Aifa has offered to act as a go-between and has started negotiations but is not confident that providers&#39 contributions subsidising IFAs will be extended to this year.

An increase in compensation claims and the number of firms being wound up in the aftermath of endowment reviews has coincided with the ending of the Pass fees&#39 subsidy by product providers. This year, many IFA firms have been hit with levy increases of as much as 2,500 per cent.

FSA spokesman Ruth Excell says: “David Kenmir sent an offer to the product providers that he would be happy to meet and he has reiterated it. The purpose of the meeting would be to discuss a resolution to the current situation where product providers used to make a contribution to the levy.”

The FSCS has no involvement in the offer from Kenmir. Money Marketing contacted several product providers for a response but none would comment on the matter.

A total of 505 IFA firms which have still to pay their FSA fees including the Compensation Scheme levy have received a final payment demand by recorded delivery from the regulator this week. The figure is down from 630 firms which had still to pay last week. The FSA says firms will face penalties if payment is not received within ten days of receipt of this demand. Firms will incur an administration fee of £250 plus 5 per cent above the Bank of England base rate on the sum outstanding.


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