Charles Stanley cites £1.4m FSCS levy as costs rise
Increasing levies leading to permanent cost rises which will ultimately effect customers, says director.
Investment adviser and stockbroker Charles Stanley has added to criticism of the funding model of the Financial Services Compensation Scheme after projecting a 10 per cent rise to the levy the company pays this year.
In a trading statement posted to the London Stock Exchange, the company says costs have increased in the six months to 30 September 2011. While this includes the costs of advisers and adviser teams moving their assets to the company while still within their contractual periods of non-competition, the increase costs also include a £1.4m contribution to the FSCS levy in the first six month of the financial year alone.
James Rawlingson, co-director of Charles Stanley Group, said: “It’s extremely disappointing. It’s a very material cost for us. The principle of charging happy, healthy firms for the failure of others seems to be a poor principle.
“It seems to be leading to a permanent rise in cost base around the industry. The principle is not only unfair but it’s penalising the clients of well-run firms.
“Part of the challenge is managing expectations of the marketplace and clearly the people who hold shares in large firms, which may sit in their pension portfolios, expect a predictable return.
“I understand our regulator trying to force the industry to bear the costs of itself but they are painting everybody with the same brush.”
The company also reported falling revenues earlier this summer when it announced results for the three months to June 2012 (26 July).