Yesterday we coordinated a day of action to campaign for fairer funding of the Financial Services Compensation Scheme.
Calls on the FSCS so far this year have resulted in IFAs and other investment intermediaries paying a £60m interim levy. This is to compensate investors with MF Global, Keydata, Arch cru and Wills & Co, among others.
It will probably not surprise you to hear that we never recommended our clients invest in any of these failed schemes.
The cost of this interim levy to Informed Choice was over £10,000, which we paid to the FSCS this week.
Whilst we strongly support the need for a Financial Services Compensation Scheme, we believe that the way in which it is funded is unfair and unreasonable.
What we would like to see is a better categorisation of firms that pay for the costs of compensation, so that the right firms pay to compensate investors. Our preferred solution to FSCS funding is a product levy, with a charge applied to different types of investments based on the risks they pose.
We asked Financial Secretary to the Treasury Mark Hoban MP for his help to create a fairer FSCS, ahead of a consultation paper on the subject later this year from the Financial Services Authority.
Because our clients ultimately pay to fund the FSCS through advice and product charges, we believe it is important this issue is resolved quickly.
Our petition gathered an amazing 1,421 signatures in less than 24 hours yesterday, which we believe shows the strength of feeling in the IFA community about these unfair FSCS levies.
We look forward to receiving a response from Mark Hoban MP in due course and hope that our day of action has helped to influence the contents of the FSA consultation paper on FSCS funding, due out later this year.
