Tuesday, 14 August 2012 08:57
Advisers feel penalised by FSCS and demand greater transparency
A survey by PanaceaIFA, an online site for financial advisers, found 97 per cent are unhappy with the Financial Services Compensation Service.
The survey of almost 500 advisers found 97 per cent of respondents felt the FSCS unfairly penalised responsible firms for the malpractice of others such as Arch Cru and Keydata.
The same amount called for the FSCS to demonstrate greater transparency by clearly showing how its charges arise and how they are balanced between staff, wages, pension contributions, administration and actual claim payments.
Over half felt their firm would be unable to pay increasing levies and 54 per cent felt those receiving FSCS compensation should have an excess deducted to discourage illegitimate claims.
Some 64 per cent did not have run-off insurance, meaning any compensation to customers after the firm has finished trading would be collected by the adviser industry.
Derek Bradley, chief executive of PanaceaIFA, said: "The most significant finding is the overwhelming demand from the IFA industry for clarity on the charges and how they are later used. Transparency should apply across all aspects of our industry and the FSCS should not be exempt from this.
"The extensive feedback from this survey does however illustrate that perhaps some advisers do not fully appreciate the fund of the last resort role of the FSCS and how the funding model is set up.
"Whilst IFAs would like to see the 'sinner' pay the increasing cost of the levy, it is because of their 'sins' and resulting demise that they cannot. Despite this, the need for a better FSCS levy solution is clear as the burden cannot always fall on the adviser."
The survey of almost 500 advisers found 97 per cent of respondents felt the FSCS unfairly penalised responsible firms for the malpractice of others such as Arch Cru and Keydata.
The same amount called for the FSCS to demonstrate greater transparency by clearly showing how its charges arise and how they are balanced between staff, wages, pension contributions, administration and actual claim payments.
Over half felt their firm would be unable to pay increasing levies and 54 per cent felt those receiving FSCS compensation should have an excess deducted to discourage illegitimate claims.
Some 64 per cent did not have run-off insurance, meaning any compensation to customers after the firm has finished trading would be collected by the adviser industry.
Derek Bradley, chief executive of PanaceaIFA, said: "The most significant finding is the overwhelming demand from the IFA industry for clarity on the charges and how they are later used. Transparency should apply across all aspects of our industry and the FSCS should not be exempt from this.
"The extensive feedback from this survey does however illustrate that perhaps some advisers do not fully appreciate the fund of the last resort role of the FSCS and how the funding model is set up.
"Whilst IFAs would like to see the 'sinner' pay the increasing cost of the levy, it is because of their 'sins' and resulting demise that they cannot. Despite this, the need for a better FSCS levy solution is clear as the burden cannot always fall on the adviser."
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