Chris Cummings, director general of AIFA) commented on the FSA’s Discussion Paper, which outlines proposals to reform the way in which the Financial Services Compensation Scheme (FSCS) is funded.
Chris Cummings said: “We are very pleased that the FSA is proposing radical reform of the funding of the Compensation Scheme, and, in particular, that the regulator has not included the status quo in its four options. This is good news for the IFA sector. Any wider pooling of the costs incurred is a major step forward which should help reduce costs for our members.
“AIFA lobbied both FSA and FSCS to obtain this review on behalf of our members. Although we recognise that the Scheme is a vital regulatory safety net which maintains consumer confidence in the financial services industry, in order to maintain the industry’s confidence in the Scheme, it is imperative that the costs are divided more fairly.
“The current system is unsustainable and unfair. The smallest firms, our members, are being asked to pay the lion’s share of the funding of the Scheme. This year, the fee block into which most IFAs fall will be billed for £47.5m. This equates to around £1360 per adviser.
“We are pleased that the FSA‘s proposals to address the complex issues involved are thorough and radical and that the regulator is proposing a clean break with the past.
“We are disappointed, however, that the FSA is proposing that the new structure will not be implemented until the 07/08 fee year. We were hoping it would be in place for 06/07.”
