"FCA needs to find a fairer way to fund the FSCS" "FCA needs to find a fairer way to fund the FSCS"

20 Feb 2017 Ken Davy

Past regulators, whether Fimbra, PIA, or the FSA all started off with great expectations, which ultimately ended in confusion for consumers and unsatisfactory outcomes for those they regulated.

Now the FCA, after a less than auspicious first few years, is under new leadership and the key question is, can it at last demonstrate that regulation can deliver the Holy Grail of good consumer outcomes and a vibrant, healthy financial services sector?

The vast majority of financial advisers are already playing their part in delivering good consumer outcomes

The vast majority of financial advisers are already playing their part in delivering good consumer outcomes, and it is time they benefited from the often promised 'regulatory dividend'.   I have consistently argued three points in relation to the FSCS.

Firstly, the current funding of the FSCS is grotesquely unfair to the financial advice sector.  Secondly, either a product levy or a levy on the funds received by product and investment providers would be both fairer and minuscule in its impact on any single organisation.  Thirdly, an added benefit of such a change would be to give providers a direct vested interest in helping to stamp out bad practices and phoney schemes because of their infinitely greater knowledge of the marketplace.

Some recent events have begun to vindicate these arguments, as providers have started to proactively consider client outcomes when accepting business or dubious switching requests.  Zurich are to be congratulated on setting up a 'scam line' in conjunction with the Pensions Advisory Service, as are Phoenix for stopping £30m of suspect pension transfers.

There is undoubtedly much more that could be done by providers without jeopardising their relationships with either advisers or clients, and contributing directly to the FSCS would dramatically accelerate this trend for the mutual benefit of all concerned.

I urge the FCA and HM Treasury to ensure that the present FSCS funding review acknowledges the significant enhancement of client outcomes which will flow from providers funding of the FSCS.  It will still have a degree of unfairness because it is impossible for the ‘polluters’ to pay, as they have gone bust or disappeared. It will however be the fairest system possible and will at the same time demonstrate to financial advisers that there really is 'a light at the end of the tunnel'.

Ken Davy is chairman of SimplyBiz Group


Testimonials

"In a world of image-is-everything, I have come across many a recruitment agent over the years. Promises not fulfilled, comments not substantiated, systems/procedures that don't manifest themselves. Instead what I have found with you and SimplyBiz is, above all, integrity. What you have said has been based on experience and knowledge and, accordingly, has been based on facts. Facts that have, of course, transpired to be true. The ability to rely on those who know what the DA application process is all about is impossible to cost, but important to value."

Derek Avenell
Hawthorn Financial Services

Read More

Latest News

"Please, Mr Provider, could we have some more?"

May 23, 2018

When Dickens’ Oliver Twist famously said “Please, sir, I want some more”, every reader or audience member knew that there was plenty available and his need for ‘more’ should have been satisfied. I feel somewhat the same in respect of the outcome of the Financial Services Compensation Scheme review.

Read more >

Liz Coyle: Your Senior Managers & Certification Regime refresher

May 17, 2018

Liz Coyle, Compliance Policy Manager for The SimplyBiz Group, recaps the key aspects of next year's big rules change.

Read more >

SimplyBiz Group's Centra investment system has attracted 1500 users

May 14, 2018

Dan Russell, MD of SimplyBiz Investment Services, expresses his delight with the speed and enthusiasm with which Centra, the end-to-end investment service, has been embraced by advisers.

Read more >

"Ending 'phoenixing' is a matter of political will"

May 10, 2018

The government minister, Robert Jenrick, recently highlighted that the practice of ‘phoenixing’ can be deeply corrosive to public trust in the system which is progressively passed on to the whole of our economy. While this is undoubtedly true, what I find so depressing is that after all these years the debate had to take place at all.

Read more >