Advisers voice support for product levy to FCA

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Advisers voice support for product levy to FCA
Credit: Dominic Lipinski/PA Wire

Advisers have expressed their support for a product levy based on risk to help ensure the ‘polluter pays’ for unsuitable advice.

The suggestions were among the responses collated by Panacea Adviser to the Financial Conduct Authority’s call for input on the consumer investments market, which closed to submissions this month.

In an email to the FCA, Derek Bradley, chief executive of Panacea Adviser, wrote: “It is important that advisers have their voices heard and we feel that it is important to the FCA that you receive this feedback.”

One adviser wrote: “As clearly some products offer significantly higher risk than others and it is the mis-selling of products that is the cause of much of the problem, a levy... would be a useful start.”

Another suggestion to ensuring compensation is paid for fairly by those that cause loss, read: “Fund [the] FSCS from [a] product charge based on risk, not by [a] bill to advisers.”

Their feedback echoed earlier calls from the Association of Mortgage Intermediaries for the FCA to reduce the financial burden on advisers by implementing a product levy.

Rob Sinclair, chief executive of the mortgage broker trade body, said the AMI had "regular" meetings with "senior people" at the FCA, where he had set out in detail how the product levy might work.

He said: "We have discussed the whole compensation issue in regular meetings with the FCA, including with its chairman, Charles Randell.

"Something needs to be done."

However, the regulator has previously ruled out a product levy.

Earlier this year Christopher Woolard, who was interim FCA chief executive at the time, said the problem with a product levy was that it reduced the issue to a "zero-sum game", meaning different sectors of the financial services industry would end up bickering over who should pay more.

He said the real goal should be to ensure size of the FSCS pot was as small as possible.

chloe.cheung@ft.com

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