PIMFA to work with FCA on proposed ‘polluter pays’ model for personal investment firms

29 November 2023

PIMFA to work with FCA on proposed ‘polluter pays’ model for personal investment firms

PIMFA, the trade association for wealth management, investment services and the financial advice and planning industry has noted today’s (29 November 2023) proposals from the Financial Conduct Authority (FCA), for personal investment firms to hold additional capital to pay for consumer redress, as the first stage towards a ‘polluter pays’ model of consumer compensation.

Liz Field, Chief Executive of PIMFA, commented: “We note the Financial Conduct Authority’s (FCA) proposals on extending capital requirements to personal investment firms to cover future consumer redress.

“We strongly believe in, and have argued the case for a number of years, for a ‘polluter pays’ model to compensate consumers that have received a poor outcome, and we are aware of the moral hazard the existence of the Financial Services Compensation Scheme (FSCS) provides for well-run firms funding the misdeeds of others. 

“We would stress the need for these proposals to be proportionate, and specifically not to act as a barrier to firms wishing to enter the market. While we do strongly believe that these proposals will incentivise good advice, the FCA must be mindful that it does not strangle the supply of advice to consumers.

“We look forward to engaging with the consultation process and would urge the FCA to be mindful to the fact that, at least initially, firms will face the prospect of two charges by way of the FSCS levy and the requirement to hold additional capital as proposed. We still believe additional sources of funding to subsidise the FSCS levy should be considered to reduce this burden and would continue to urge the FCA and Treasury to consider FCA fines to subsidise the FSCS levy in the short term.”

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NOTES TO EDITORS

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA  leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, the Future of Supervision and the FSCS levy – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Find out more about PIMFA’s Diversity and Inclusion work – read more
• Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376 / +44 (0) 7843 903258

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869