Financial Conduct Authority chief executive designate Martin Wheatley says the regulator is keen to reduce the cost burden of the Financial Services Compensation Scheme, and believes advisers could help flag up potential areas of concern before they arise.
The comments were made as part of a letter sent to Informed Choice, which held a day of action campaign last month calling for a fairer FSCS funding model.
A total of 1,421 advisers signed the petition which called for better FSCS categorisation of firms and a greater awareness to be raised among consumers that the FSCS is funded by the industry, and that consumers ultimately pay the cost through charges.
A copy of the petition was sent to Treasury financial secretary Mark Hoban, FSCS chief executive Mark Neale, and FSA chief executive Hector Sants.
Informed Choice received a response from Wheatley on behalf of the FSA last week.
The FSA has asked the firm not to disclose a copy of the letter in full. However Informed Choice managing director Martin Bamford (pictured) says he is encouraged by Wheatley’s response, which discussed “the role of the regulator in minimising the burden on firms”.
The letter also asked advisers to help the FSA and the future FCA to identify potentially risky products which could cause consumer detriment.
Bamford says: “IFAs are best placed to do that, we are on the frontline and we are seeing these things being promoted to us. If we can flag them up before they become a problem, and an expensive problem at that, that has got to be a good thing.
“We know when the FCA comes into being it is going to take a much more interventionist approach. That will work really well in concert with perhaps a panel of IFAs flagging up problem areas before they arise, so that the FSA and later the FCA will know what to keep its eye on.”
He adds: “The regulator does recognise this is hurting the IFA sector and it is keen to hear about ideas about how the FSCS funding model could be improved.”
Investment advisers were hit with a £60m interim FSCS levy in March for 2011/12, to cover the cost of firm collapses including MF Global, Keydata, CF Arch cru and Wills and Co.
Last month the FSCS set the total industry levy for 2012/2013 at £265m, of which investment intermediaries will pay £78m and life and pensions advisers will pay £46m. Both sub-classes potentially face additional costs depending on the cost of compensating investors in MF Global and spread-betting firm Worldspreads.