Following the publication of the FSA’s recent CP13/1 consultation paper on future FSCS funding, Tenet is disappointed that calls for alternative funding mechanisms, in particular a compensation scheme levy, have been dismissed.
The adviser support group agrees with The Association of Professional Financial Advisers (APFA) that the FSA’s decision to retain its proposal to increase the investment and intermediation sub-class threshold from £100m to £150m is inappropriate within the economic and regulatory environment and raises fresh concerns regarding the burden of increased compensation levels on intermediary firms.
In Tenet’s response to the original consultation paper CP12/16 on FSCS funding it specifically offered the solution of a regulatory and compensation scheme levy which has been discounted in the latest feedback, despite the FSA acknowledging that valid ways to overcome some of the obstacles they had raised to operating a levy system had been identified.
Tenet’s group distribution and development director, Keith Richards, said: “It is potentially reckless to continue with a model so clearly flawed and ignoring many of the concerns and alternative solutions offered when there is a chance to remedy the problem.
“Tenet has asserted for some time that the entire regulatory and compensation funding programme is at risk of destabilising its own foundations and that the unfair burden continues to be placed on the intermediary sector.
“Whilst the FSA has proposed to shift some of the burden to product manufacturers in its latest consultation paper, we are equally not convinced that this is the right solution for the long term. The intermediary market has to be clear and transparent regarding costs and it goes against the FSA’s own principles to bundle the ever increasing cost of regulation and compensation in to the industry’s pricing models.”