Friday, 15 March 2013 15:06
FSCS announces reduced interim levy of £20m for advisers
The Financial Services Compensation Scheme announced an interim levy of £20m on investment intermediaries today.
However, the FSCS said this was lower than the £25m interim levy it had estimated in its budget in February.
This is the fourth consecutive year that the FSCS has placed an interim levy on advisers.
This figure is due to higher compensation costs from Pritchard Stockbrokers and spreadbetting firm Worldspreads.
The FSCS said the investment levy of 2012/13 was not sufficient to meet all compensation costs before the 2013/14 levy becomes available in July.
There was also a £16m levy on insurance intermediaries due to PPI costs.
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Mark Neale, FSCS chief executive, said: "The interim levies illustrate some important things about the current arrangements for funding the FSCS. One is the simple unpredictability of demand on us. This is the fourth consecutive year in which we've had to come back to one part of the industry or another for more money.
"It underlines that, even over periods as short as a year, FSCS often has no visibility of impending failure when the annual levy is set, or even if it does, cannot readily quantify claims before they arrive."
Commenting on the FSCS funding review, Mr Neale said he was against pre-funding as it meant taking money from the industry when it may not be needed. However, he said he understood it would mean predictability in demands and allow firms to plan for the costs.
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However, the FSCS said this was lower than the £25m interim levy it had estimated in its budget in February.
This is the fourth consecutive year that the FSCS has placed an interim levy on advisers.
This figure is due to higher compensation costs from Pritchard Stockbrokers and spreadbetting firm Worldspreads.
The FSCS said the investment levy of 2012/13 was not sufficient to meet all compensation costs before the 2013/14 levy becomes available in July.
There was also a £16m levy on insurance intermediaries due to PPI costs.
{desktop}{/desktop}{mobile}{/mobile}
Mark Neale, FSCS chief executive, said: "The interim levies illustrate some important things about the current arrangements for funding the FSCS. One is the simple unpredictability of demand on us. This is the fourth consecutive year in which we've had to come back to one part of the industry or another for more money.
"It underlines that, even over periods as short as a year, FSCS often has no visibility of impending failure when the annual levy is set, or even if it does, cannot readily quantify claims before they arrive."
Commenting on the FSCS funding review, Mr Neale said he was against pre-funding as it meant taking money from the industry when it may not be needed. However, he said he understood it would mean predictability in demands and allow firms to plan for the costs.
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