The Financial Conduct Authority’s acting chief executive has met with the Association of Professional Financial Advisers to consider its condemnation of the current way the compensation system is funded.
Apfa’s council members stated that while the public needs to be protected, it is not acceptable that customers of well run businesses should be forced to pay for the failure of the incompetent or the fraudulent.
Apfa chairman Lord Deben said: “Where regulation fails and firms go bust compensation should be paid from the income from fines.
“It is utterly unprincipled that those fines go straight to the Treasury and the FCA should be courageous enough to stand up to government and demand a fair system.”
The council also raised other issues with Tracey McDermott, including the next steps for the Financial Advice Market Review; the approach of the Financial Ombudsman Service to decision-making; and the forthcoming review of Financial Services Compensation Scheme levies.
Ms McDermott encouraged contributions to the FSCS review, as the FCA had “an open mind” on how it might proceed, according to Apfa’s statement.
Lord Deben called for “radical changes” which would mean that regulated financial advisers giving advice in good faith no longer have to pick up the bill for advice on unregulated products.
“It is clear to us that a combination of a product levy and a whitelist, together with a proper contribution from fines, would be the fairest and most effective way to assign the levy,” he added.
Chris Hannant, Apfa’s director general, added the discussion was one of several ways in which the organisation is engaging with policymakers and regulators on its members’ behalf.
“We look forward to continuing the discussion on FAMR, the FSCS and other issues with [incoming chief executive] Andrew Bailey.
“I urge all advisers to take the opportunity to make their views heard and help us work together with the regulator and the government in creating a better, fairer regulatory environment for adviser firms across the UK.”
peter.walker@ft.com
