FSCS reveals £78m investment levy for 2012-13
Investment advisers are to be hit with a £78m annual levy for 2012-13 to cover the costs of compensating investors in Arch Cru, WorldSpreads and MF Global - more than double the initial £33m predicted last month by the FSCS.
The news comes in the same week advisers paid their contribution to the £60m interim levy for 2011-12, on top of an initial £34m levy announced last April.
The overall industry annual FSCS levy has been set at £265m, £44m more than initially predicted.
Life and pensions intermediaries will pay £46m, while insurance intermediaries will pay £36m.
The costs of compensating Arch Cru investors have been split across investment intermediaries and life and pensions intermediares, with the latter category paying roughly 30 per cent of compensation costs.
Mark Neale, FSCS chief executive, said: “We know that the levy will be unwelcome news for firms during tough times. But the increases in levies in some areas follow a thorough review of claims coming in and those we can reasonably expect in 2012/13. I would like to assure the industry that we only levy for costs we are confident we shall have to meet in the year ahead.”
He added that the FSCS would “do everything we can to offset the costs of compensation” by chasing recoveries. The scheme expects to recover £20.45m in the next year, Mr Neale said.
IFA Martin Bamford this week collected more than 1,400 signatures for a petition which he is sending to Mark Hoban, financial secretary to the Treasury, in an attempt to persuade the minister to influence the FSA’s review of the FSCS on behalf of investment advisers.
Meanwhile, Richard Saunders, chief executive of the Investment Management Association, has also called for a fairer compensation scheme after his members were forced to pay £233m towards the record £326m interim levy in January 2011.
Mr Saunders said: “It would be much fairer, given that we cannot expect the taxpayer to meet the compensation costs, to spread them across all financial services firms when providers of more exotic products go down.”
Fund managers have no contribution to the 2012-13 levy, but if compensation costs for intermediaries exceed £100m with the addition of any interim levy in 2013, they will be forced to subsidise.