The direction of travel for FSCS levies is not one that brings confidence

While a reduction in the total levy for the year relative to the previous forecast is welcome, the general direction of travel as indicated by the 2022-23 levy is a point of concern. 

I should be clear that any criticism of the levy in general is not to be conflated with criticism of the FSCS itself. The FSCS is aware of the issue and is not blind to criticism.

To its credit, the FSCS continues to work closely with industry, takes on recommendations to work better with us, and the publication of this forecast, in and of itself, is proof of an increased desire to be more open and transparent.

But the fact remains that any individual who has found themselves having to claim on the FSCS is an individual who has been badly let down and gone through an experience that it would have been better to have avoided in the first place, despite any form of financial compensation. 

Pimfa strongly believes that while there is certainly scope to change the structure of the compensation scheme itself, it is ultimately the forces and drivers of failure that result in compensation and that have to be addressed.

I recognise there are limits to this approach in that they are forward-looking while FSCS claims, by their very nature, are retrospective. To their credit, the Financial Conduct Authority has adopted many of the recommendations we have previously put to them, but it will clearly take time for many of the regulatory initiatives it has, and will introduce, to work their way through the system.

This brings me to the indicative levy for 2022-23.

The direction of travel for FSCS levies is not one that brings confidence. It is clear to us that the industry will continue to pay for the poor conduct of others for some time to come, while supervisory improvements bed in and poor actors are weeded out.

We have gone on record in arguing that, both as an act of good faith towards an industry that has been badly let down, and in recognition of its own desire for the polluter to pay, a proportion of FCA fines should go towards FSCS funding. Doing so would represent an immediate reduction across industry and recognise that the principle of solidarity between companies that underpins the FSCS has been severely stretched. 

The recent failings of London Capital and Finance and the soon-to-be-investigated British Steel Pension Scheme provide a case in point. 

These are failures which are, at least in part, the direct result of poor regulatory oversight. It should not be the case that the cost of funding these failures falls solely on the industry. Indeed, in the case of LCF it was the recognition of this collective failure which led to the assent of the compensation (London Capital & Finance plc and Fraud Compensation Fund) Act. 

We need to consider the principle of collectivism as we determine where harm originates and how it is prevented. One of the reasons we have been so adamant that paid-for advertisements should be included within the government’s online safety bill are the growing numbers of consumers falling prey to online scammers. We believe that the government should consider placing what amounts to a duty of care on the platforms that publish this content and consider how, if at all, they can contribute to our collective regulatory bill. 

Without doing so, it is a very real concern for me that future calls on the FSCS will not be the result of factory-gating or advertisements on the transport system, but the result of paid-for promotions from the darkest parts of the internet. It is imperative that government and regulators act now to ensure that the problems of today are not still working through the system to become the problems of the future.

Liz Field is chief executive of PIMFA