Treasury confirms FSCS levy talks as MPs raise concerns

Mr Rathi said the focus for the FCA was preventing the situation arising in the first place and catching bad apples earlier.

He added: "There are other solutions worthy of exploration, including insurance for advice firms".

Twin threats

Chris Groom, principal of Calver Groom Financial Management, wrote to Elliot Colburn, MP for Carshalton and Wallington: “The already existing advice gap will just get even wider, meaning many more people who desperately need help with later-life planning, wills, passing on wealth etc, are going to be left stranded.”

Heather Dunne, pensions transfer specialist at The Pensions Experts, urged her MP, Tom Tugendhat (for Tonbridge and Malling), to encourage a review not just of the FSCS levy but also the difficulty in getting suitable PII cover.

She claimed these twin threats were making it worse for consumers who need advice on this area, especially post-Covid.

She wrote: “Financial advisers are suffering from an inability to advise on an area that is exceedingly relevant to many clients, incurring significantly higher PII premiums, together with larger FSCS bills.

“At the same time, those advisers are also being charged more by the FCA. Those advisers have been suffering from reduced income, because the FCA and its predecessors has altered the rules to minimise charges, as against increasing value. 

“When the markets fall as they did earlier this year, many advisers’ fees, which are based on a percentage of funds under management, also reduce. The Covid-19 impact has increased their workload, because their clients need more reassurance and guidance during these difficult times.”

Ms Dunne added the situation had been exacerbated by the regulator demanding additional statistical information within exceedingly short timescales.

She said: “The current system will result in there being fewer financial advisers, which directly impacts on the ability of the public to obtain advice. This will make them more vulnerable to poor financial consequences and scams.

"This is not a personal view; it is a known fact evidenced by a shrinking adviser population meeting higher regulatory PI and compensation costs.”

In response, his office asked Ms Dunne if she wished Mr Tugendhat to raise the points she had made with “Rishi Sunak, chancellor of the exchequer at HM Treasury, so he can look into this matter further.

“In the meantime, please let me know if there is any further action you would like Mr Tugendhat to take urgently on this issue, otherwise I shall await your response.”

It is understood that a LinkedIn Group, Financial Planners United, have also been in contact with the Treasury Committee, asking it to organise an inquiry into the burden faced by the profession.

Letters have gone out to the Treasury Committee, including from Paolo Standerwick, managing director MLP Wealth Management Ltd, who wrote to Mel Stride, chairman of the Treasury Committee, and all the  committee members.