The FSCS has promised the financial services industry that it will be called on to foot part of the £14bn Treasury loan for the B&B nationalisation only if the Government is unable to make up the deficit from the sale of the loan book.
Advisers will have to contribute if compensation exceeds the £1.84bn that banks will have to shoulder themselves.
Last week, rating agency Moody’s revealed that three-month arrears on the B&B Aire Valley Master Trust – B&B’s mortgage securitisation veh- icle – leapt to 2.3 per cent of the loanbook in the third quarter of 2008, up from 1.45 per cent in Q2 2008 and 0.8 per cent in Q3 2007.
This book does not contain any mortgages bought from GMAC-RFC which were previously criticised by rating agencies for higher arrears’ rates on B&B books.
The FSCS has already announced that deposit-taking firms will have to pay over £450m in levies next year compared with £5m this year as a result of B&B’s problems.
Brentchase Financial managing director Mike Fitzgerald says: “One thing on all IFA lips right now is how much they have to pay towards the FSCS. If you had a poll of every IFA in the UK, it would probably turn out to be their pet hate.”