Fears are growing that fierce lobbying by the Association of British Insurers will persuade the FSA to change its position on the Financial Services Compensation Scheme funding review and leave advisers facing increased levies.
Since publishing its discussion paper in March, the FSA has favoured option B – supported by Aifa and the FSCS – which would effectively see providers cross-subsidising advisers according to product class.
Now industry sources say the FSA is willing to back a combination of options B and D, which separates providers and advisers into sub-classes within product classes up to a certain threshold, with an additional general pool for emergencies.
The discussion paper highlighted the “administrative complexity” of option D. But in a meeting with the ABI last week, the FSA showed sympathy towards this option, say sources.
FSA spokesman Robin Gordon Walker says: “Our initial views in the discussion paper were not binding. There has been a record number of responses to the consultation.”
The FSCS is still backing option B, describing it as “the fairest and most resilient system for the longer term”.
The ABI has supported option C, similar to option D but without the general pool, but would support option D over the threat of option B. The Investment Management Association is lobbying for option D.
The FSA is due to make its decision in January’s board meeting which will be followed by a consultation paper.
Personal Finance Society public affairs director John Ellis says: “It is crazy that providers are lobbying so hard for something that will do so much damage to their most trustworthy and honourable source of distribution.”