In 1959, It’s Now or Never was a massive hit for Elvis Presley, selling more than 5m records and it is no exaggeration to say that it is now or never for you to have your say on how the FSCS is funded.
Everyone in the industry knows the way the FSCS is currently funded is a disgrace. It is wrong in principle and practice that you should be billed for the actions of the careless, reckless, or downright criminal firms of which you cannot possibly have any knowledge or control. Invoices from the FSCS have been dropping on you without warning, sometimes demanding payment of thousands of pounds within 30 days, for liabilities, again, totally outside your knowledge or control. We have waited years for this review and this may be our last chance to try to get this grotesque system changed.
Do you want to be faced with paying these ridiculous amounts year after year, never knowing when the next interim levy is going to hit you? If the answer is no, you must act now. The FCA’s consultation ends on 31 March, so you must submit your views or response before then at: www.fca.org.uk/cp16-42-response-form. The full consultation paper is available at: www.fca.org.uk/publication/consultation/cp16-42.pdf.
The good news is that the consultation paper makes clear that the FCA recognises the current system is unfair to intermediaries. It is equally clear that it believes product providers should contribute directly towards the liabilities of the FSCS.
However, there is still insufficient recognition of the direct affinity between investment houses and insurers and the intermediary sector; virtually every claim on the FSCS relates directly to a financial product. Equally, it is the product providers who have the market intelligence to spot advisers who are careless, reckless, or just plain crooked. If providers contribute most of the FSCS funding, it will ensure they use their market knowledge to stop problem firms creating liabilities much earlier than at present.
There are 31 questions posed in the consultation paper. However, questions three and 18 are absolutely key, please have a look at them and make your voice heard. I urge you to act as it really is a case of now or never. If you ignore this last opportunity you could end up in Heartbreak Hotel.
Ken Davy is chairman of SimplyBiz Group