"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 where people are ready to complain at a drop of a hat, I just felt it was appropriate to give credit where credit is due and on the whole I feel that SimplyBiz do a very good job."

Lawrence Hayward
Leicestershire

Read More

Latest News

"Hello, have you been mis-sold an accident claim?"

July 05, 2018

I am sure you will have been delighted to note that, at long last, the Financial Conduct Authority (FCA) is going to formally regulate the ambulance chasers.

Read more >

"We are the antidote to consolidation and want small firms to thrive"

July 02, 2018

SimplyBiz CEO Neil Stevens said the group was "passionate about being the antidote to consolidation" as he praised the work and quality of smaller advice firms.

Read more >

SimplyBiz reveals line-up for advice show

June 22, 2018

Leading figures and some of the industry’s heavyweights will feature in the online broadcast sessions from 10.30am to 2pm on 2 July.

Read more >

"Social care is elephant in the room"

June 20, 2018

There is a massive issue facing our clients, which is often referred to as a generational time bomb, that has the potential to destroy inheritances and cause misery to millions of elderly people.

Read more >