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Sinking fund floated for the FSCS

The FSA is considering proposals to set up a pre-paid emergency compensation fund as part of its review of how to fund the Financial Services Compensation Scheme.

FSCS chief executive Lor- etta Minghella says the industry is looking for a solution to manage the volatility of the existing system to avoid firms being suddenly hit by massive fee increases caused by fluctuations in compen- sation payouts.

IFAs narrowly escaped having to pay an additional levy this year because the 2005/06 levy failed to account for a threefold increase in complaints about endowments.

The shortfall will be carried forward, meaning that advisers in levy block A13 face a rise in fees of 27 per cent in 2006/07.

Minghella believes the system could draw from the example of the US Federal Department Insurance Commission, which has set up a multi-billion-dollar “sinking” fund.

The results of the consultation by Oxera are due for publication in March.

Minghella says: “The current system hits hard on the industry at different times. We need to do something to smooth this volatility. Pre-funding at a modest level might be quite helpful because it can be dipped into if anything goes down.”

But Aifa director general Chris Cummings says: “We understand the need for the compensation scheme to have a small reserve but it is difficult to justify advisers paying a significant amount for claims that may crop up in the future. This money would be better used in helping them improve their businesses.”


Govt says lenders should have expected Sipp U-turn

Industry commentators have attacked the Government’s statement that the industry should have anticipated its Sipp U-turn as a “bizarre” re-reading of the past. Standard Life head of pensions policy John Lawson says it is unbelievable that the Government has told the industry it should have been aware that a change of mood was in the […]

Revenue asks ABI to help halt turbo-chargers

The Revenue has asked the ABI for help after admitting it has made no progress in finding a way of preventing people recycling tax-free cash back into their pensions. The practice, called turbo-charging, enables people to rake in extra tax relief. The industry universally condemned Chancellor Gordon Brown for introducing a measure to ban this […]

Thinc Destini appoints Howard Flight

Thinc Destini has appointed former shadow chief secretary to the Treasury Howard Flight as non executive director. Flight, who was also Special Envoy to the City of London and Tory deputy chairman before he was ousted by former leader Michael Howard, will become chairman of the groups remuneration committee. Flight is joint chairman of Investec […]

Pru relaunches into individual personal pensions

Prudential is relaunching its individual personal pension and will be following this with a Sipp proposition later on in the year.The new IPP, the Prudential Flexible Retirement Plan. offers a flexible and transparent charging structure with a choice of commission options.The cost of advice is directly linked to charges for both new personal pensions and […]


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