Aifa has slammed the Financial Services Compensation Scheme’s £93m interim levy on advisers, saying it is “unjust and inequitable”.
The levy, announced last week, includes compensation costs of £86m, mainly to compensate Lifemark investors, and management expenses of £7m.
Investment fund managers are to be billed £233m, meaning the total FSCS interim levy is £326m.
The interim levy comes on top of £14m of compensation levies for advisers announced by the FSCS last year. Advisers have 30 days to pay the levy, althouygh they can choose to pay in instalments through the year.
The £86m of interim compensation costs being levied on advisers are the maximum permitted without breaching an annual £100m limit for the sub-class, meaning providers have had to foot the rest of the bill.
The FSCS announced it would compensate Lifemark investors in September 2010, despite the fact the group’s life settlement portfolios continue to run, although with liquidity issues.
In November, the FSCS said it would consider Lifemark’s portfolios to contain no value at all for the purposes of calculating the payouts.
FSCS chief executive Mark Neale says: “We have a duty to compensate consumers who have eligible claims.”
Aifa director Robert Sinclair says: “This announcement is a real blow to advisers. The fact is this remains a failure of regulation and the supervision of financial services.
“Although the letter of regulation has been followed, the fact that advisers now face this further levy is unjust and inequitable.”
Norwest Consultants principal Harry Katz says: “I am pretty brassed off about it. If you want to have a properly funded, robust and fair compensation scheme, it should be funded from a product levy. What is so unfair at the moment is that the good guys are paying for the bad guys.”