The Smaller Businesses Practitioner Panel has called on the FSA to consider the impact of Financial Services Compensation Scheme levies on the viability of firms.
Speaking at the FSA’s annual public meeting in London this week, panel chairman Guy Matthews said the past few years had seen a dramatic increase in FSCS levies for firms, which he says is set to continue.
He said: “We think regulators should be charged to look at the impact of the FSCS levy on the viability of firms. We also feel now would seem the most appropriate time to question whether such a self-insurance system is affordable or fit for purpose in its current form.
“In most cases the well-run compliant companies are the ones that are penalised and have to finance the compensation payments to clients of erring firms. We have emphasised to the FSA that the burden of costs of all compliance and regulatory requirements can place a disproportionate burden on senior management of smaller firms.”
He added much of smaller firms’ time and resources need to be devoted to regulatory and compliance issues, which is not in clients’ best interests.