Call for IFA day of action over FSCS levies
IFA firm Informed Choice has resurrected its lobbying campaign to reform Financial Services Compensation Scheme funding and is organising a “day of action” next week to highlight the current broken model.
The FSCS Levy Action Group was formed by Informed Choice last February after some advisers saw huge increases in their FSCS bills.
An open letter and petition to FSA chief executive Hector Sants and Treasury financial secretary Mark Hoban generated 678 signatures calling for urgent reform of the FSCS funding model.
This year the group is centering its lobbying efforts on a “day of action” on April 25, as Informed Choice says this is the day most interim levies are paid.
Investment advisers have been hit with a £60m interim FSCS levy for 2011/13, to cover the cost of firm collapses including MF Global Keydata, CF Arch cru and Wills and Co.
The campaign is calling for better categorisation of firms within the FSCS funding model.
The current system issues levies based on what sub-class firms fall into, such as investment intermediation and investment fund management. However the way the sub-classes are defined has meant the collapse of providers and stockbrokers has fallen on the investment intermediation sub-class.
The campaign is also aiming to raise awareness among consumers that the FSCS is funded by the industry, and that consumers ultimately pay the cost through charges.
Advisers can pledge their support by visiting the FSCS Levy Action Group website on April 25 to add their name, email address and post code. This will send an automatic open letter to Hoban via email.
Informed Choice managing director Martin Bamford (pictured) is aiming to send at least 1,000 emails to Mark Hoban and to get the hashtag #HelpUsHoban trending on Twitter.
Bamford says: “It is important we raise awareness about this issue and do what we can. It is becoming such a ridiculous burden on business owners and the demands on the FSCS just keep on coming.
“It is an unstoppable force and every time a firm collapses we think ‘there goes another £1,000’. The idea is to raise awareness and get more people on side.”
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Readers' comments (18)
Martin
Don't waste your time. Hoban hasn't listened to date and you won't make any difference.
There have been guys out here lobbying for years and nothing has changed.
Going through the front door doesn't work. The Leviathan is too big and you need to find the achilles heel.
After spending the last 40 yrs in Financial Services it was on the cards that there were going to be problems with FSA, here we have a non producing organisation making rules and regulations for firms who are on the whole sef employed who only get paid if they produce bus, unlike the FSA who have this disease called money making backsides, they get paid iwhat ever they do, ask yourselves would you employ Sants on the salary hes on, could he produce enough bus i think not
Well done Martin!
For all of us, there's Everything to gain, Nothing to lose!
I could agree more! The FSCS have a statutory duty to allocate and make use of funds aporopriatly, does paying their lawyers nearly £8m to pursue ifa firms,many of which do not even trade for matter ls arising from Keydata really in the industry interests? As we all know it will just be added to the levy!!
The FSCS like the FSA do not listen to anyone. Hoban like Sants has never listened to anyone and even if he gets a 1000 emails he still wont listen. He is as arrogant as those in Canary Wharf
Well done Martin - can you start a similar campaign that states CMC's are liable to pay any FOS case fee they bring against an adviser with the view that if the complaint is upheld by FOS the adviser then needs to foot the bill as well as any compensation due.
Under the current rules advisers could well be put out of business even if they never have a case upheld against them the way CMC's are going about their business!
I guess we would all agree that the FSCS is needed as part of the protection for the UK consumer of financial services. The root cause of the problem is that the intermediation subclass is just too wide. Take a look at the legal basis of the class and ask a simple question. How can such a broad group of activities form one subclass?
Any of the following in relation to designated investment business
• dealing in investments as principal;
• dealing in investment as agent;
• arranging (bringing about) deals in investments;
• making arrangements with a view to transactions in investments;
• advising on investments;
• providing basic advice on a stakeholder product;
• safeguarding and administering of assets
• arranging safeguarding and administrating of assets;
• operating a multilateral trading facility.
• agreeing to carry on a regulated activity which is within any of the above.
BUT excluding activities that relate to long term insurance contracts or rights under a
stakeholder pension scheme or a personal pension scheme.
It’s a bit like some weird classification of the animal kingdom, "yes, dolphins and insects they are the same thing!!"
Someone somewhere thought that the above all had similar attributes. They were wrong and they need to accept that and change it. Now.
If I could be sure that virtually every IFA commited themselves to withold their FSA fees for a period of say 2 months, when given the bill and FSCS levy when given the bill, I would also happily take the consequenses. They are going to force me out of business on the balance of probabilities, so why not say enough is enough.
Nick Bamford
I applaud your wishes, but to be honest, I think you would get more activity out of a pair of hibernating cane toads than that pair of jokers Sants and Hoban.
Petition. Forget it.
Try something else.
Well Done on this initiative, Martin.
It's too easy for people to say nothing will come of it. What I would suggest however is that Andrew Tyrie, Chris Leslie, Mark Garnier and Harriett Baldwin be copied in on everything.