Steven Cameron, Pensions Director at Aegon comments on the FCA’s latest discussion paper into the highly contentious topic of compensation schemes and levies:
“The Financial Services Compensation Scheme (FSCS) plays a vital ‘last resort’ role in protecting consumers on the failure of a firm responsible for financial detriment. But despite previous attempts to improve the funding, and providers now paying a share of intermediary levies, many adviser firms who consistently offer their clients a professional service, and don’t give rise to compensation payments, feel unfairly treated as levies continue to rise sharply.
“We welcome this new opportunity to think again about how to strengthen the concept of ‘polluter pays’. Many favour a move to risk based levies, so it’s disappointing that the FCA continues to see this as unworkable despite the new data it has been collecting on higher risk activities.
“We fully support the FCA’s efforts to tackle the root cause of compensation payments and look forward to more details of how FCA initiatives such as the new Consumer Duty and the Consumer Investments Strategy might help here. Alongside these, we encourage the FCA to continue to clamp down on phoenixing and to get smarter at identifying firm-level issues as early as possible.”
