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Tenet calls for product tax to fund regulatory costs

Tenet has called on the Government to introduce a premium tax on all retail financial services products to part fund the FSA and Financial Services Compensation until a review of financial services regulation is carried out.

The network says a tax on products would be more transparent than regulatory costs being passed on to consumers through adviser charging.

Tenet says the tax should be calculated as a percentage of the investment or product contribution and should be collected and allocated by the Government to cover the cost of regulation, the compensation scheme and consumer financial education initiatives.

Distribution and development director Keith Richards says: “The funding strategy is clearly outdated, given the likelihood that costs and liabilities will continue to increase with fewer firms left to carry the burden. As an interim solution, we suggest consumers pay a relative premium which is transparent and would apply to everyone, irrespective of distribution route.”

In its consultation on FSCS funding, published last month, the FSA said a product levy would not be feasible because it would not take into account the risks of different products and transactions.

Carbon Financial managing director Gordon Wilson says: “There is definitely a need to prevent good advisers from suffering rapidly increasing costs.”

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