14 December 2022
PIMFA welcomes update from FCA on the FSCS levy but continues to argue for a polluter pays model
PIMFA, the trade association for wealth management, investment services and the personal investment and financial advice industry, has welcomed the latest update from the Financial Conduct Authority (FCA) outlining its current thinking on the future direction of the compensation framework and how it might lower the burden of the Financial Services Compensation Scheme (FSCS) levy.
However PIMFA continues to argue that a polluter pays model would be the more effective and fair way to fund the FSCS levy and that FCA fines for poor behaviour by firms should be used to reduce the burden of the levy, which well-run firms currently bear.
Simon Harrington, Head of Public Affairs at PIMFA, commented: It is helpful that the FCA has set out its thinking and the potential future direction of the compensation framework. We remain committed to seeing a reduced FSCS levy over a sustained period of time, largely because this would indicate fewer consumers having received a poor outcome that it would have been better to avoid in the first instance.
We continue to believe the way to reduce the funding requirement for the scheme in the long term is through better, more targeted regulatory action which drives bad actors out of the market well before consumers have suffered harm. The FCA should be congratulated on what we perceive to be significant and welcome steps to address this as part of its consumer investment strategy and wider transformation project.
However, the FSCS is constructed to pay for the sins of the past rather than those of the present, and any progress made on the regulatory front will not be apparent for some time. We remain of the view that a polluter pays model remains the fairest way to compensate individuals and, in line with this principle would again urge the Government to consider the use of FCA fines to help contribute to the FSCS levy.
In the preceding month alone, nearly 25% of fines issued by the FCA could have been redirected towards consumers instead of the Exchequer – this is a sizeable amount and would have a significant impact on the overheads of UK business.
<ENDS>
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:
PIMFA Communications and PR – +44 (0)20 7382 0376
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225