Regulation  

£30m FSCS interim levy postponed

The chief executive of the FSCS said the scheme had updated its assumptions over claims against the collapsed Catalyst Investment Group and Fyshe Horton Finney Limited, since publishing its plan and budget for 2014/15 in January.

The levy was due to be imposed on advisers before the end of the current financial year, but its introduction will now be reappraised later this year.

A review of the number of claims coming in and the timing of compensation payments, revealed that the FSCS now expected to process claims against Catalyst and its role in promoting bonds backed by ARM Asset Backed Securities in the 2014/15 financial year.

Article continues after advert

Following the announcement of the potential interim levy in January, David Penny, managing director of Somerset-based Invest Southwest, warned it was becoming a significant “barrier to entry” into the advisory community.

The total FSCS levy for financial services firms has been set at £313m for the financial year of 2014/15, up from £311m during the previous year.

Mr Neale said: “New information on the volume and timing of claims suggests we do not need to levy the industry for more money during 2013/14.

“That is good news for firms, however, we still expect claims relating to Catalyst during next year, and will update the industry when we have more information on what this change means for 2014/15 when we announce the levy in April.”

Chris Hannant, director general of the Association of Professional Financial Advisers, said: “This is good news of sorts for advisers. The sector will still have to pay it, but at least they aren’t now faced with the prospect of having to find the money to do so at such short notice.

“Under the FSCS’s new approach to calculating the levy, in future years they are more likely to ‘over-levy’, which should remove the need for an interim levy altogether. So while this £30m will still be factored in, it should be as part of a process which means smoother and more stable payments.”

Adviser View

Carl Melvin, director of Renfrewshire-based Affluent Financial Planning, said: “The FSCS has a lack of understanding of the dynamics of running a small firm. There is no cap in the amount firms have to pay, and they have just 30 days to pay. How many small businesses have the cashflow to that? This is just a stay of execution.”