The regulator lacks the power to introduce a product levy as part of its Financial Services Compensation Scheme (FSCS) review, the chief executive of the Personal Finance Society has claimed.
Keith Richards said meetings with the Financial Conduct Authority (FCA) had revealed that the introduction of such a levy would require legislation, which would put it outside the scope of the current study.
He added: “The FCA is open-minded to more proposals and suggestions. What was really important was the demonstation of how willing it was, including the FSCS itself, to come up with alternatives.”
Mr Richards said he had spoken to HM Treasury about a product levy during the Financial Advice Market Review consultation, but said there was “no particular reaction” to the idea, and he was told civil servants would consider “any reasonable proposals”.
A product levy is popular among advisers and would be attached to the transaction and sale of a product which would be added to its price and paid by the consumer.
The chief executive of the FSCS has previously said he was opposed to the introduction of a product levy.
Mark Neale said those who advocated a product levy would need to think about how this would be justified to product providers and to unadvised consumers of those products.
In March, acting FCA chief executive Tracey McDermott said the review of the FSCS levy, which has recently begun, would probably take a year.
A spokeswoman for the FCA declined to comment.
Adviser view:
Dan Clayden, director of Devon-based Clayden Associates, said: “There are obvious benefits to the product levy but it won’t solve everything and I don’t think there is necessarily a solution that will please everyone.”
