The Financial Services Compensation Scheme has said it was not involved in setting the levy targets outlined by the Financial Conduct Authority earlier this week, but stressed that the two bodies remain united in their overarching goals.
Earlier this week, the FCA published the details on the next phase of its consumer investments strategy and said it was targeting a 10 per cent year-on-year reduction in the Life Distribution & Investment Intermediation and Investment Provision funding classes over five years, from 2025 to 2030.
Speaking to FTAdviser today, FSCS chairman Marshall Bailey said the FSCS does not have a direct influence on the numbers quoted by the FCA but agreed the direction of travel set by the regulator was the right one.
He said: “10 per cent is the FCA’s number, I don't know if that's right or wrong, we weren't part of the calculation of that forecast, and probably we don’t want that precision.
“But the goal remains the same, the faster we can get people to understand suitability and that process, the faster we can define that, then we might even be able to accelerate that number.”
The FCA had said on Wednesday this was because it had to stabilise the levy first, due to the historic nature of many of the claims being brought.
Bailey echoed this sentiment. But he said it was important not to focus “too much on the precision of these things”.
He explained the FSCS was focused on reducing poor outcomes, as through the reduction of poor outcomes and achievement of better outcomes for savers and investors, the lifeboat scheme will be “heading in the right direction”.
He said: “What I think would be really not helpful is if we focus too much on whether we achieve 12 per cent or 8 per cent versus a 10 per cent target based upon a number that happens through the number of today.
“It's the goal of having an ambition. I admire the FCA for putting that target out there and we are absolutely supportive of the work that is going on across all these stakeholder groups to help them achieve those admissions but the number itself is directional rather than something that we want to focus on.”
He also noted the term “stability” implied that remaining within 10 per cent was a number the FSCS was happy with - which was not the case.
“We’re absolutely not happy,” he said. "We would much rather it be substantially inferior and we were all working together to get it down."
Separately, an FSCS spokesperson told FTAdviser on Thursday: “We appreciate that the current compensation costs are simply too high and represent unacceptable levels of harm to consumers looking to invest for the future.
"FSCS’s compensation costs linked to investments have been rising year-on-year, with the LDII class levy doubling since 2015 and breaching its class limit in three of the past four years.