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The FSCS levy needs to be structured fairly throughout the industry

As you cannot have failed to notice, both in the press and, more crucially, by the letters landing on your doormats, the FSCS has raised its levy. Moreover, it has increased year on year since 2008 by an amount that really makes your eyes water.

For example, looking at Bradbury Hamilton, for the last couple of years, we have seen the levy increase first by a staggering six-and-a-half times and then more than double from last year to this year. To top it off, we were not even close to being the worst hit, not by a long way.

Although we knew that there would be a recalculation, I think it is fair to say that no one expected it to be nearly so high. Principals need to budget for each year carefully and it is nigh on impossible to do this with one hand tied behind our backs, not know- ing what figure the FSCS will plump for.

Now, to make sure advisers have a fighting chance, the FSCS needs to provide a better service in return for our hard- earned money.

Untying our hands can be done by simply providing adequate communication to advisers and reasonable payment periods once the bills have been sent. Otherwise, those only just getting by on their budgeting will be hit hard out of the blue.

As much as I appreciate that the FSCS has a job to do and a duty to consumers, there needs to be a transparent framework for the charges to be clearly understood by financial services profession- als, so that we can see an accounting for all of our hard- earned coppers going into the FSCS’s coffers.

After the Keydata misselling debacle and again with Arch Cru, there is a need for adequate provision for consumers. However, the important point is that a mechanism needs to be in place to structure the levy fairly throughout the whole industry.

I do not want to sound like a grouch but it is a worry that when other misselling issues inevitably come out of the woodwork, will we see another astronomical leap in the levy?

Will advisers have to take another hit when some are already struggling with changes in the industry with RDR approaching or are there measures that can be put in place before we get to this stage? We need the FSCS to reassure us that there will be a sensible ceiling placed on charges.

So what now? Collective action is always something to be applauded and we should take our hats off to Martin Bamford and the FSCS Levy Action Group campaign for taking their very similar concerns on the FSCS levy to the powers that be – the FSA, the FSCS and the Treasury.

The impact on the industry will be nationwide and we need to ensure as a collective that all future levies are cost-appropriate and transparent as I fear this is an issue that will not be going away any time soon.

Sheriar Bradbury is managing director of Bradbury Hamilton

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Fairly and the FSA don’t seem to go together well.

    A product levy has to be the only way to go and if the FSA want transparency over costs then this should help let consumers know where some of their money goes. A levy for FSA costs would also show their cost to consumers as well.

    If we have to disclose our fees then why not the FSA costs as well, they are after all a cost to consumers !

  2. The Keydata Debacle was down to regulatory failure, and was nothing to do with mis-selling.(as suggested by Mr Bradbury)

    The FSCS have clearly stated that Keydata’s brochures were misleading and contained lots of false information.

    The fact that they continued to produce false and misleading literature, even after the FSA’s enforcement notice early in 2007, really does confirm what a complete failure the regulator was.

    This whole fiasco is fault of the FSA and no-one else!

  3. I see two completely seperate issues.

    The fund costs soaring needs addressing and the quicker the better.

    The multiples of previous payments some are asked to pay above the percentage the scheme costs have been increased by, I see as a totally different matter, I see these as some firms which have got away lightly in the past. This probably shows why some firms have not been so concerned about commercial cost rises and trends in the industry, they have not been paying them.

    Now they will start to see what the rest of us have been bleating on about, or ‘whinging’ as some of them have previously called it.

    All it took was a bill on their mat to waken them up.

    Wait for the extra 30% post RDR, then the bills from firms which no longer exist, then the first massive execution only frim, then the large firm which transferred everything on to one wrap on a fee basis and has multiple claims, then….

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