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Severn takes over as IFAs face 18% levy rise

New Aifa director general David Severn has called for a cut in regulatory costs for IFAs as the sector faces an 18 per cent rise in the FSCS levy.

In the Financial Services Compensation Scheme budget for 2005/06, investment intermediaries have been slapped with a increase in levy from 25.4m to 30m while general insurance firms have had a cut in their levy from 135m to 95m.

The fee increase for IFAs comes as Severn, who replaced former director general Paul Smee this week, pledges to fight for IFA costs to be lowered and for product providers to take responsibility for missales.

The total FSCS levy has gone down, mainly due to the fall in general insurance and for pension review claims, which drops from 64.1m to 32m.

FSCS chief executive Loretta Minghella acknowledges that many intermediaries will face higher levies and says she is trying to make the compensation scheme budget process as accurate as possible so firms could prepare.

She says: “The difficulty is that we can never be sure until claims arrive how many will come in. What we can do to make life easier is try and be as realistic as possible with our predictions and make them known as soon as we can.”

Anand Associates managing director Bhupinder Anand says: “This is a tax. On top of the massive rises last year, it will go straight to our bottom line and we are going to have to work harder just to stand still.”

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