Financial Services Compensation Scheme  

Govt passes FSCS levy concerns back to regulator

Govt passes FSCS levy concerns back to regulator

Calls for reform to the Financial Services Compensation Scheme could fall on deaf ears amid a refusal by the economic secretary to the Treasury to accept responsibility for setting the lifeboat scheme's levy.

Several advisers had written to MPs, with the Personal Finance Society producing a template letter this week with which advisers have been encouraged to lobby their local MPs. 

But the industry's hot potato was passed back to the Financial Conduct Authority yesterday (February 11) when John Glen MP maintained the lifeboat scheme, and hence its levy, was independent from the government. 

Mr Glen said: "The FSCS is an independent non-governmental body. The FSCS carries out its compensation function within rules set by the FCA and the Prudential Regulation Authority, who are also independent from government.

"The FSCS levy is set annually by the FSCS within the limits set by the FCA and PRA. It is for the FCA and PRA to consider the impact of the levies on the firms they regulate, acting in line with their statutory duties.

"The government has no role in setting the levy." 

He made the comments in response to a question raised by Ronnie Cowan, MP for Inverclyde, who last week asked what discussions had taken place with the regulator concerning a review of the FSCS levy. 

Last month advisers learned they were expected to pay £213m towards the FSCS levy for the coming year — almost 13 per cent more than the previous year.

The lifeboat body attributed the hike to a rise in the number of self-invested personal pension claims, which they warned were increasingly complex. 

Since the rise a number of advisers have already contacted their MPs and the FSCS has received at least one letter asking for a discussion about the levy structure. The PFS has previously warned the levy could limit access to advice.

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