The regulator revealed a range of proposals today as part of a major review on how to pay for the lifeboat fund in future.
However, while the FCA said it considered a product levy carefully – it will not proceed with that idea.
Personal Finance Society chief executive Keith Richards said: “While it is disappointing that the FCA has effectively ruled out the possibility of introducing a product levy, it has acknowledged that there are other ways it could more clearly link product risk to FSCS charges.”
The PFS broadly welcomed, however, many points in the review, including the fact it had broadened the scope of it in response to feedback from the sector.
Mr Richards was pleased the FCA has acknowledged the burden of funding the FSCS has fallen disproportionately onto intermediary firms in recent years but he warned: “The idea of shifting the burden to product providers should be approached with caution.”
He said: “What’s most important is that the burden of FSCS funding is shifted to higher risk segments of our sector. Given the language used by the FCA in its consultation paper, I am optimistic that this will be the result of its review.”
“The concept of a risk-based levy, where firms could be eligible for a discount if their behavior reduced risk, has merit and is certainly worth considering in more detail.”
APFA welcomed the FCA proposals as “a step forward”.
Chris Hannant, APFA’s Director General, said: “It is essential to look at the long term sustainability and fairness of a system designed to support confidence in financial services as a whole.
“The burden shouldn’t disproportionately fall on financial advisers. I am disappointed that it will take longer to bring this into force, but it is better that we get this right for a sustainable long term solution.
“It is good to see that the FCA acknowledge that this should not solely be an exercise in cutting the cake, but it is also essential to look at the scale of the levies. In particular, the growing problems around SIPPs and pensions must be addressed. Preventing consumers being ripped off should be a high priority for the FCA.”