FeesOct 23 2020

FSCS levy hike of 174 per cent hits IFA

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FSCS levy hike of 174 per cent hits IFA
Photo: Andrew Neel via Pexels

A Greater Manchester-based adviser has been hit by a 174 per cent increase to its Financial Services Compensation Scheme levy this year.

In a letter to Financial Adviser, the firm's director, who requested his name to be withheld, said his total regulatory fee had increased by 45 per cent. 

He said: "This rise is solely due to the FSCS element increasing by 174 per cent.

"I am a one-registered-individual firm. I don't do defined benefit transfers, etc, and I have a plain vanilla client bank."

He has written to his MP and the head of the FCA, using one of the template letters shared by regulatory consultant Phil Dibb as part of Financial Adviser's Keep Fees Fair campaign and as part of a LinkedIn campaign set up by Mr Dibb and others to highlight the problems with the regulatory system in the UK.

The adviser added: "If my experience is typical, the increase in regulatory fees this year is significantly higher than has occurred in previous years."

His comments came as the chief executive of the FSCS, Caroline Rainbird, said education was the answer to preventing many claims ending up at the FSCS.

Ms Rainbird said the way in which the levy is collected had been reviewed before, and a different focus is now needed.

She told FTAdviser: "Where I want to focus, and where I think we collectively need to focus, is not on shifting the payment of the levy around, although I do not want to sound as though I do not understand the challenges in this. 

“Shifting [the levy] around does not go to the heart of the problem.”

While the lifeboat scheme welcomed the regulator’s latest call for input on retail investments, and said it will look to respond and provide suggestions, Ms Rainbird said more onus needed to be put on how to educate consumers.

She said: “The heart of the problem is that consumers are having poor outcomes so we need to look at how we can better educate people to make informed decisions and make them aware of the scams that are out there.”

But she added the call for input was “a good way of getting people together around the table” to discuss issues that are rife within the industry.

To send your own letters to your MPs, email simoney.kyriakou@ft.com for some templates