I have noticed that quite a few firms state that they object to the recent FCSC levy increase because they have had no complaints against them.
I always thought that the FSCS levy acted like insurance, so if someone said in a parallel universe that they objected to paying this year’s insurance premium because they had never made a claim then it would be nonsensical. Someone who did pay their premium and did have a complaint would benefit from the pooling approach that is insurance by definition
And therein lies the rub.
I always thought the idea of the FSCS levy was that when a humble adviser genuinely advised on a piece of business, got something wrong – we all make mistakes – was no longer in business, with no current professional indemnity insurance to pick up the claim, then the FSCS acted as a support mechanism to protect the consumer. Fine.
What we seem to have are non-regulated businesses in the mix, products failing rather than advice on them, and all manner of things disturbing what I always thought was the FSCS mechanism. No wonder it does not work and fees are through the roof.
The levy should simply act when insurance fails. Given that all advisers have to carry mandatory PI insurance, then surely it is not beyond the wit of man to make any product also carry similar. In doing so you are back to my point above – the levy picks up genuine cases of a mis-sale/bad advice when the adviser in question has retired.
Ian McIver
Development Director,
Nexus IFA,
Somerset
