Hector Sants has confirmed that the way FSCS sub-classes are made up will be re-assessed after the recent FSCS funding row.
FSA chief executive Hector Sants has confirmed that the way FSCS sub-classes are made up will be re-assessed after the recent funding row.
Hundreds of distributors have been up in arms at having to pay a share of the latest FSCS interim levy, including compensation costs of £93m relating to the failure of Keydata. Earlier this month, Informed Choice managing director Martin Bamford submitted an open letter and petition with 678 signatures to Hector Sants and Treasury financial secretary Mark Hoban calling for urgent reform of the current FSCS funding model. Bamford called on the authorities to find a way to make those adviser firms who sell failed investment products “more directly liable for the cost of compensation”.
In response, Sants confirms that formal consultation on FSCS funding had been postponed due to the move to the new regulatory framework. On the structure of the sub-classes Sants says: “The investment intermediation sub-class was established when we last reviewed the FSCS funding model. It covers the activities of advising, arranging or dealing in investments.. While firms in this sub-class may have different business models, we concluded that there was sufficient affinity between the firms to include them in the same sub-class. When we consult on the review of FSCS funding, we intend to discuss the composition of the classes.”
In its letter, Informed Choice also raised the issue of what liability adviser firms hold who sold a failed firm’s investment products. Martin Bamford said: “I appreciate Hector Sants taking the time to respond to our petition and demonstrate that the FSA understands the very real concerns of IFA business owners.
“Perhaps the best we can hope for now is a more effective regulator in the shape of the Financial Conduct Authority, taking earlier and more robust action where they identify emerging risks. I remain optimistic that we will eventually see reform when it comes to the funding of the FSCS.”
Sants pledged the FSA will persist with a review of how the FSCS is funded once “structural uncertainties” occuring from changes to both the European and domestic regulatory architecture are resolved.