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Transact FSCS levy rises 82% but firm eyes fee cut

Transact FSCS levy rises 82% but firm eyes fee cut

The Financial Services Compensation Scheme (FSCS) bill paid by the Transact platform was £900,000 higher in the year to the end of September 2020 than in the previous year.

The 82 per cent FSCS fee increase accounted for the bulk of the £1.5m increase in the professional and regulatory fees paid by the business during the year, which amounted to £7m.

The increased costs can be seen in the context of the Transact platform’s funds under direction (the company’s own term for the quantity of assets held on the platform) rising to £42bn, up from the previous year’s £37bn.

The increase came despite market movements contributing negatively to the tune of £224m, compared with a positive contribution from market movements of over £1bn in the year prior.

The information was contained in the latest financial results of Transact's parent company, Integrafin, which were released to the market last week. 

Net inflows were broadly flat at £3.5bn. 

The profit after tax for the period was £45.5m, compared with £41m for the previous year. 

Alexander Scott, chief executive of the firm, said the firm’s charges would fall again in the coming year and “benefit the majority” of the platform’s customers. 

This was after it cut its commission charges this year in what was its thirteenth rate reduction in 11 years.

Annual commission charges reduced from 0.29 per cent to 0.28 per cent and from 0.19 per cent to 0.18 per cent on April 1.

Commenting on the outlook for the wider market, Mr Scott said: "The operating environment has become more difficult and unpredictable and this seems likely to remain the case in the coming months. Additionally, there is still little certainty on the shape of the UK's trading relationship with the European Union, despite the proximity of the end of the transition period.

"However, none of this changes the fundamental need of individuals and their families to plan and take care of their financial future, so we will continue to refine our systems and processes and further develop and expand the financial infrastructure and associated services that we have successfully delivered for twenty years through both internal investment and consideration of acquisition opportunities.

"We will keep investing in our staff and supporting them, being especially mindful of their mental welfare in these difficult times.

"We will continue to manage our cost base prudently, to deliver fair returns for all of our stakeholders, and we will leverage the agility that has helped shape our approach to the events of the last few months, as we advance into the new year.”

Integrafin was reported to be one of the firms interested in acquiring the rival Nucleus platform this month. 

david.thorpe@ft.com