Aifa’s FSCS claims fund will not work, warn IFAs
Aifa’s proposal to establish a fund to pay back the FSCS for its Keydata claims will not get off the ground, IFAs have warned.
Last week, Investment Adviser’s sister website FTAdviser.com revealed that Aifa was considering “allocating resources” to a scheme to protect smaller firms and agree a criteria-based “dividend” payment from larger firms to satisfy the FSCS claims.
Aifa director Robert Sinclair said in a letter to the trade body’s council that while less than 10 per cent of the firms claimed against are Aifa members, the claim has “potential to be repeated on subsequent issues”.
However, Ian Lowes, managing director of Lowes Financial Management and an Aifa member, said IFAs have fallen into two camps, those that sold Keydata products and those that did not, yet both are being penalised by the FSCS levy.
He said: “Those advisers should counterclaim this, as the FSA should have had a better handle on the situation. It is not just about protecting the end consumer but IFAs as well. It might be better for Aifa to spend their resources by protecting the industry as opposed to bailing them out.”
Mr Lowes believes the “arbitration scheme” will receive some objections from Aifa members who did not sell Arch Cru or Keydata products, as those who did sell these products would still be benefiting from the revenue brought in.
Aifa refused to comment on the consultation, which has now concluded.
