PIMFA welcomes reduction in FSCS levy, but repeats call for FCA fines to subsidise the levy and ensure ‘polluters pay’

26 May 2022

PIMFA welcomes reduction in FSCS levy, but repeats call for FCA fines to subsidise the levy and ensure ‘polluters pay’

PIMFA, the trade association for the wealth management, investment services and the investment and financial advice industry, welcomes the latest forecast of the Financial Services Compensation Scheme (FSCS) levy which shows a reduction in the levy for 2022/23 to £625mn from an original forecast of £900m in November 2021.

But PIMFA continues to call for the Government to consider using Financial Conduct Authority (FCA) fines to subsidise the levy, at the very least as a short-term option. Doing so would be the purest way of ensuring a ‘polluter pays’ model of compensation for consumers and would mean 90% in the FSCS levy this financial year would be paid from FCA fines. We continue to believe the current model, which sees consumers suffer and well-run firms pay for the poor behaviour of others, is both unsustainable and unfair.

PIMFA has been actively working with the FCA for some considerable time and we have been pleased to see in the past year that the FCA has accepted our argument that the FSCS levy is dysfunctional. We will continue to work with the FCA to achieve a long-term solution to the levy.

Simon Harrington, Head of Public Affairs at PIMFA, commented: “We are pleased to see that the annual levy for the coming year has significantly decreased from what was forecast late last year. While this represents a significant reprieve for firms, we are cognisant of the fact that we will continue to see increases in the levy as harm works its way through the system.

“We have consistently argued that the Government should give consideration to the use of FCA fines to help subsidise the levy, which would represent a 90% contribution to the levy this year and is the purest distillation of the polluter pays model. Doing so would represent a significant show of solidarity to an industry which feels not enough have been done to bring the cost of the FSCS levy under control.

“In addition, we welcome the publication of the FSCS’s data insights. It is vital that public bodies are transparent in the way they work and the FSCS should be congratulated on its laudable efforts to do this.”

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Notes for 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, 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.
• 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 / +44 (0)7979 493225