The Financial Services Compensation Scheme’s chairman has said he would welcome a review of its current structure and urged for more discussion over the regulatory set up.
Marshall Bailey, who became chairman of the lifeboat scheme in 2018, told Financial Adviser the scheme would “welcome opportunities for review” as it was a chance to “work with parties who have a significant role to play”.
However, he stopped short of saying fundamental change to the levy system was necessary.
His comments come after the regulatory framework came under fire when the levy paid by the industry to fund the compensation scheme was hiked up once again.
Last month, advisers found out they were expected to pay £213m towards the FSCS levy for the coming year — almost 13 per cent more than the previous year.
The scheme said the increase was down to a rise in the number of self-invested personal pension claims and the level of complexity of such claims.
The hike has prompted a number of advisers to write to their MPs to challenge the way the scheme is funded and the FSCS has now been contacted by at least one politician, challenging the structure and the burden falling on advisers.
Ronnie Cowan, MP of Inverclyde, asked the Treasury what discussions officials in the exchequer have had with stakeholders and representatives from the Financial Conduct Authority on its review of the FSCS levy calculation.
I an written response, John Glen, MP for Salisbury, said it was for the FCA and the Prudential Regulation Authority 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".
Mr Bailey said: “I welcome [the MP’s letter]. She’s doing the right thing by calling for this discussion.
“Let’s have it and do what we can. MPs play an important role in the legislation that has created the FSCS in the first place. We operate effectively within a system that has been set up by legislation and for any of that to change, we need to have a discussion.”
Mr Bailey said “we are where we are” but added that time had “moved on” from the original construct. He said he was happy to engage with stakeholders but stressed the scheme could “only influence where it has influence”.
He added: “If others can find ways of improving the system and can work with individuals to change that, then of course that will happen.”
When asked about how the FSCS could alleviate the levy burden on advisers, Caroline Rainbird, its chief executive, stressed the lifeboat scheme did not set the ways in which it was governed.
She said: “At the end of the day, the Financial Conduct Authority drives us forward and sets the basis on which we pay and on which levies are gathered from the industry.