In a survey of 62 of TMA’s directly authorised firms, 95% came out in favour of this option, which would see the levy weighted against the riskiness of the product being sold.
The fee would be collected by providers and paid for by consumers. The FCA launched a consultation in December asking the industry to share its views on the future funding of the Financial Services Compensation Scheme (FSCS). It is considering a raft of changes including asking providers to contribute to intermediation claims.
However, a solely consumer-funded, provider-collected, option was not put forward by the FCA. Copland wants advisers to suggest this method of funding in the consultation feedback paper.
If the regulator does not take a favourable view of charging consumers for their own compensation scheme, TMA wants to see the separation of life and pensions intermediaries , which currently sit together in the same product class for the FSCS levy.
Currently advisers are billed for the estimated amount of compensation required for a class of products which they are responsible for giving advice for.
Some 93% of DA firms responding to the survey said the current FSCS levy was unfair to brokers and intermediaries who were not licensed to sell pensions products.
Stephen Brockman, mortgage broker at A2B Mortgage, said: “It’s unfair that the FCA is holding mortgage brokers accountable for the poor advice of others. We’re not licensed to sell products with an investment element so we shouldn’t have to pay into a pot to bail out brokers who do.
“The levy should be split to account for the difference in low and high risk products. For instance, it could be divided into two sub-sections; one for non-investment product sellers and another high risk one for sellers of investment products and pensions. Firms would then be charged fees according to the type of product sold and the level of potential risk. This currently isn’t an option, so all in the industry that are affected by this need to make their voices heard and should respond to the consultation.”
Brokers have until the 31 March to respond with views on funding being sought under question 14: What are your views on the different funding classes we have set out here? Do you have any alternative proposals?
Or brokers can write a letter to:
Cosmo Gibson
Redress Policy
Strategy & Competition
Financial Conduct Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
Telephone: 020 7066 7630
Email: cp16-42@fca.org.uk
