RegulationApr 5 2017

Advisers want higher levy for high-risk products

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Advisers want higher levy for high-risk products

More than 9 in 10 advisers believe firms involved with riskier unregulated products should contribute a higher portion to Financial Services Compensation Scheme levies, according to an Aegon survey.

Another four fifths of the poll, involving nearly 150 advisers on Aegon’s advisory panel, advocated a solution that would vary levies in line with what the firm is exposing the scheme to.

In addition, three-quarters of respondents favoured the idea of life and pension providers and platform companies paying a greater share of the bill linked to their product types.

There was similar support (67 per cent) for the idea of fund managers contributing more for claims linked to investment aspects.

However, the notion of advisers paying more for a few years to build up a fund to reduce future volatility gained less traction, with only 18 per cent of respondents supporting this approach.

Mark Till, chief distribution and marketing officer at Aegon, said: “The findings offer important insights into intermediary views, which we will share with the FCA as part of our consultation response.

“The FSCS levies are clearly an area of concern among intermediaries and there’s a real strength of feeling coming through. With Sipp claims last year resulting in £77m of compensation payments, in part due to investments in unregulated collective investment schemes, it’s no wonder there are strong calls for risk-based levies."

In December the Financial Conduct Authority launched a consultation on changes to the FSCS levy.

Mr Till said: “The FCA consultation is a real opportunity to improve the sustainability of the intermediary sector, one of the aims of the Financial Advice Market Review."

Adviser view

Kieron Robertson, chartered financial planner at West Sussex-based Concierge Wealth Management, said: “There is an argument that adviser firms that take on risky business should pay a higher premium. It is like car insurance: if I buy a Ferrari, my car insurance would be higher than usual because Ferraris are fast and therefore there is a heightened risk of crashing.”