The Financial Services Compensation Scheme (FSCS) confirmed in January it would raise an additional £15m from home finance intermediaries to cover a projected budget shortfall resulting from claims related “largely to the failure of one particular firm”.
This morning the FSCS confirmed a broker and wealth management firm Fuel Investments Limited, was responsible for the emergency levy. The firm was declared in default by the FSCS in December 2015.
NACFB chief executive Rob Lankey said he supported the FSCS’s consumer protection mandate but thought the extra cost was hitting the wrong type of advisers.
“The steps we’ve taken to embrace regulation have not been cost-free and our members are investing their own money into compliance, both through dedicated compliance schemes and in training and education. This laudable work means there is less spare money to spend on the FSCS levy, so this supplementary levy hits the best-qualified brokers hardest of all,” he said.
The wrong message
According to Lankey, of the 170 NACFB members carrying out residential mortgage business, only a “small proportion” offered investment advice. And “far fewer offer any kind of unregulated investment scheme of the sort that has led to the imposition of the levy,” he said.
He therefore believes the additional levy, which had taken many brokers by surprise, sent out the wrong message to the industry.
“Given that one firm is responsible for the majority of the claims that led to the £15m levy, it seems unreasonable to target the good guys to cover the costs incurred by their less reputable rivals,” he said.
“This is particularly unreasonable when the activities concerned related to unregulated overseas investments not to failings in the mortgage advice activities for which mortgage brokers pay their regulatory dues.”
He added: “The NACFB would prefer to see a more equitable approach and one that recognises the work our brokers are already putting in every day to raise the standards of the industry as a whole.”