SimplyBiz chair Ken Davy has upped his criticism of Financial Services Compensation Scheme funding after the lifeboat fund announced another additional fee call.
Yesterday, the FSCS said it needed to raise another £24m from advisers through an interim levy due to an increase in Sipp claims, often related to the misselling of high-risk products.
The lifeboat fund had already reached its maximum standard levy contribution from life and pension advisers.
In a statement this morning, Davy says: “This additional levy highlights once again the disgraceful injustice of the current funding method of the FSCS. Thousands of firms who have never been involved in this type of business or had any way of being aware of, or stopping, the firms that have caused the losses are faced with picking up the bill!
“This totally arbitrary and ridiculous system which virtually everyone recognises is a broken model must be radically changed by the FCA without any further delay.”
In a recent review of FSCS funding, the FCA introduced new regulatory reporting requirements for higher-risk products to see if the data could be used to risk-rate the amount firms pay towards the FSCS compensation pot.
What should be happening is the PI holders of the Advisor firms should also contribute, to many firms just shut up shop to avoid the future liabilities, this should be addressed, Financial Adequacy is irrelevant as the firms know in advance they are going to close, so its gone prior!!! The PI company just sits back and thinks, Got away with that one!!!
If the PII policies of firms selling high risk toxic junk don’t cover such activities (about which Andrew Bailey has been quoted as saying ~ amazingly ~ that the FCA isn’t particularly concerned), the problem is nothing to do with the insurers.
It should be illegal for any firm to transact any class of business for which it doesn’t have relevant PII cover and the FCA should enforce such a rule in the harshest possible terms.
“disgraceful injustice” is a perfect phrase to describe whats going on.
The regulators fail in their duty, collect substantial bonuses for themselves whilst we pay for their generous remuneration and their constant mistakes.
Our regulatory system is totally broken and unaccountable.
It’s not just bonuses. Most of the current problems arising from uninsured UCIS sales occurred on Hector Sants’ watch at the FSA and look what he got.
Unfortunately, retaining the status quo is in the interests the people who have the power to change it (regulators and politicians). Whether the people who fund it are treated fairly or equitably is of secondary importance.
If you accept the above as true then the dilatory actions (and inaction) of all concerned are simply explained.
The FSCS model is perfect.
That is if you’re a live for the day, unprofessional, fundamentally dishonest or at best fecklessly incompetent wastrel who is prepared to con people through their lack of knowledge and misplaced trust.
This system is akin to me having to go to prison because my next door neighbour but one decides to kill someone who is then free to go and do it again.
The rogues are laughing all the way to the bank and we’re paying for it but unfortunately the head of the FSCS can’t see a problem!
Broken…. but do they REALLY care?
Bit of a silly question really.. The only license issued by the regulator is the one issued to the corrupt and criminal that states ” carry on regardless” as the honest will just pick up the tab anyway
If the FSCS has already raised the maximum £100M levy against advisers, then this additional levy will fall on the providers, not adviser firms.
Of course, SimplyBiz own Verbatim Portfolio Management who will probably be picking up the tab. No wonder he thinks it is a disgraceful injustice.
Actually, I don’t have a problem with the principle of the FSCS, which is the same as for all insurances, namely that levies (premiums) on the many cover the sins (losses) of the few.
Where the regulator has allowed it all to go catastrophically wrong (to which it doesn’t even have the decency to own up) is its failure to prevent the sins of the few getting totally out of hand and, worse still, for that errant minority to commit those sins without proper PII cover.
You cannot expect, an entity or entities, like the FCA, FSCS and FOS to have any kind of fiduciary skill when it flits between denial, and accountability to suit political aims and gains.
The FSCS is a great example of that…. collective punishment (financial or other) is a crime when we have no control over the people committing these offences, and what makes this even more unpalatable is these levies or fines are passed on to the consumer via increased charges and costs, so hurting the people its there to protect.
Which exposes as a complete sham the FCA’s professed concerns about how the high costs of advice are deterring people from seeking financial advice.