New research shows that most IFAs believe the ongoing FSCS funding review by the FCA will not go far enough.
The research, organised by online community and resource for financial advisers Panacea Adviser, asked IFAs a number of key questions on their expectations for the current FSCS review, including the dismissal of a product levy, transparency over levies and alternative methods for funding the FSCS.
The majority of advisers, just less than 60%, said the FCA needed to come up with an alternative to the current funding system. What’s more, 88% disagreed with the regulator’s decision to rule out a product levy as part of the review. Just 2% of advisers said the review would go far enough to improve the FSCS funding model.
Just over half of the advisers also suggested that in addition to the popularity of a product levy as an alternative method for funding the FSCS, 55% of advisers favoured a ‘polluter pays’ approach, including a ‘no-claims bonus’ for adviser firms that have never had to claim.
It was also revealed that 95% of respondents called for greater transparency around how the FCA arrives at its levy figures and just under 40% said the increased levies imposed by the FCA could leave their firm unable to pay.
Panacea Chief Executive Derek Bradley, said: “Panacea Adviser has been calling for a new approach to funding FSCS for some time now. While our survey highlights the demand for a product levy, a proposal which we too are disappointed to see being ruled out by the FCA, we firmly believe there is another alternative: retaining 100% of all fines.”
The document from Panacea argus that banking fines collected since 2014 could have been used to fund the FSCS. It reckons that, for example, fines in 2016 totally £22,127,442, most of which was passed to the treasury.
Derek Bradley added: “Put it bluntly, the FCA needs to do the maths in order to persuade the Treasury – which underwrites the FSCS – that all fines could, and should, be used to reduce the burden of regulatory cost, in particular that of the highly contentious FSCS levy that all too often hits small IFA businesses the hardest.”