IFAs hit back after £93m FSCS levy

Fairer FSCS costs are being demanded by a newly formed IFA Action Group after the recent £93m interim levy placed on intermediaries

FSCS logoAn IFA Action Group has been formed to campaign for fairer FSCS costs following the recent £93m interim levy placed on intermediaries.

The group ask for greater accountability for IFAs who sell failed investment products as well as a commitment from the FSA to use product sales data to intervene earlier where high risk products are being sold to retail investors. They are also calling for a consumer awareness campaign to explain the FSCS funding mechanism, so that the public can appreciate that their IFA is paying to compensate investors in failed schemes. They have further requested a commitment from the FSCS to keep management expenses to an absolute minimum.

Informed Choice managing director Martin Bamford has written to FSA chief executive Hector Sants, FSCS chief executive Mark Neale and Treasury financial secretary Mark Hoban, arguing:

“In many cases, this interim levy is equivalent to 1% of business turnover. We have seen examples in the trade press this week where the levy has increased by as much as 756 per cent for some firms compared to last year… Whilst we support the consumer protection and confidence objectives of the FSCS, we believe that there is something fundamentally unfair about the way in which this levy has been calculated, allocated and communicated.”

He also claims that it is unfair to place the burden for paying compensation on those IFA firms who have never recommended risky or esoteric investment schemes to their clients.

Along with setting up a website and Twitter page, the group has launched a petition that will be presented to FSA chief executive Hector Sants and Treasury financial secretary Mark Hoban on February 17.

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