Financial Conduct Authority  

FCA hints at talks with govt on cash raised from fines

FCA hints at talks with govt on cash raised from fines

The Financial Conduct Authority has hinted at upcoming talks with the government on the use of money raised from fines, as advisers have called for a fairer distribution of the proceeds.

Speaking to FTAdviser last week (September 15) the FCA's director of consumer investments, Debbie Gupta, said the FCA would be sitting down with government later this year to discuss ways to bring down the cost of the financial services compensation regime.

Asked whether this discussion would include potential changes to how millions of pounds in fines collected every year from financial firms are handed to the Treasury instead of being redistributed, she said: “We're planning to set out our thinking about a review of the compensation for work later this year and I think that's probably the time where we would be very interested in views from industry and also obviously be having conversations with the government.

“It would be premature to preempt that discussion, and that debate, at this point."

The FCA is targeting a year-on-year reduction in the Life Distribution & Investment Intermediation and Investment Provision funding classes over five years, from 2025 to 2030.

As part of its plans to reduce the redress bill, the watchdog is working on addressing poor advice, strengthening capital standards and reviewing Financial Services Compensation Scheme funding.

Felix Milton, chartered financial planner at Philip J Milton & Company, welcomed the move but argued the FCA still needed to address the issue of fines.

“I am still dismayed that there is no talk of using any fines towards the levy as after all, firm failure and FSCS compensation becoming payable is at least partly the blame of the FCA,” he said. 

“I too would also like to see harsher punishment for those who flaunt the rules and fundamentally leave the FSCS to pick up the pieces, such as repossession of homes and seizure of personal assets.”

The regulator had initially mooted a 10 per cent year-on-year reduction in levies for advisers but has since backtracked on this figure, saying it had been published prematurely.

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