The Personal Finance Society has encouraged its adviser members to write to their local MP in a bid to tackle the rising regulatory costs on the industry.
The professional body — which has produced a template letter for advisers to follow — urged advisers to tell their MPs about the consequences of a hardening professional indemnity insurance market and the increases to the Financial Services Compensation Scheme levy.
In the template, the PFS also outlines its own potential solution which it believes would deliver a sustainable and fairer financial education and compensation strategy, improve consumer confidence to engage in their financial wellbeing while reducing the financial uncertainty for advisers created by the FSCS levy and soaring PI premiums.
Compensation is currently paid through a combination of a firm’s PI insurance and the levies to the FSCS.
Under the PFS’s plans, it would instead be funded from both the market and a levy on the £9trn of retail assets managed by the UK investment industry.
The PFS claims such a levy, which would pay all existing compensation and fund proactive consumer education through the Money and Pensions Service, would only cost about 0.006 per cent of a firm’s assets under management.
Keith Richards, chief executive of the PFS, said: “This is not a generic communication for a letter writing campaign, which would have little impact and just create more paperwork for MPs.
“We are encouraging financial advisers to tell MPs and other policymakers about what is happening in their community in their own words and giving them the option of referencing the PFS’s proposed solution as a starting point for debate in a clear and accurate way.”
Last month advisers found out they were expected to pay £213m towards the FSCS levy for the coming year — almost 13 per cent more than the previous year.
The scheme said the increase was down to a rise in the number of self-invested personal pension claims and the level of complexity of such claims.
Since the hike, a number of advisers have already contacted their MPs and the FSCS has received at least one letter asking for a discussion about the levy structure.
Advisers’ PI cover has also increased over the past 10 months since the Financial Conduct Authority hiked the Financial Ombudsman Service’s compensation limit from £150,000 to £350,000.
Mr Richards said he hoped the template would allow advisers to add their voice to calls for concern, adding there was a need for “all to do something” and that it was “time for a united approach” to force the government to take action.
The letter template is available here.
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