Treasury committee chairman Andrew Tyrie has challenged the FCA’s smaller business practitioner panel to provide solutions to rocketing adviser bills for the Financial Services Compensation Scheme.
Tyrie’s comments came after Citywide Financial Partners director Clinton Askew, who also chairs the FCA’s smaller business panel, said his own firm’s FSCS bill increased by 300 per cent this year.
He said: “We had [FSCS chief executive] Mark Neale in front of the panel in September, and our view at the time was that the FSCS was insurance cover priced without reference to the underlying risk.
“There is an opportunity to step back and begin to think more widely about how consumers can be protected in these sort of circumstances.
“There are some structural issues [with the FSCS]. One of the problems [FSCS chief executive] Mark Neale has is that he can’t make recoveries from professional indemnity insurers because their contracts specifically write out claims from the FSCS, so in a way there are mechanisms that could alleviate some of the problems for advisers.”
However, Tyrie challenged Askew to develop specific reform options for policymakers to consider.
He said: “We are hearing the moaning and we can be sympathetic, but what we need is to hear some answers. You don’t need to answer that now, but that’s what we’re in the market for.”
FCA practitioner panel chairman and HSBC UK and Europe chief executive Antonio Simoes said his panel has primarily focused on the broader cost of regulation.
He said: “As a panel we have not discussed the FSCS as much, what we have discussed is the overall cost.” He said this year’s 7.9 per cent increase in FCA costs is “unsustainable”
The comments come after FCA chairman John Griffith-Jones told MPs the regulator would put the cost of the FSCS to advisers at the centre of an upcoming review.