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APFA welcomes £5m fall in FSCS costs levy

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  • 20/01/2015
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APFA welcomes £5m fall in FSCS costs levy
The Association of Professional Financial Advisers (APFA) has welcomed news that the Financial Services Compensation Scheme (FSCS) plans to cut its costs levy on the industry by £5m.

Regulators have proposed levying the industry £74.4m to pay for the day-to-day running of the FSCS up until next March, a 6% fall on last year’s levy.

APFA director general Chris Hannant (pictured) said: “Any fall in the costs borne by advisers is to be welcomed, with the proposed reduction in the levy just over £5m compared to last year. It is important that the regulatory bodies maintain a strong discipline on costs.”

The planned “management expenses levy” is £69.1m, the minimum amount that will be levied for the period to pay for non-compensation costs the FSCS incurs in its work, such as paying for staff, IT, and legal costs associated with trying to recover from firms monies paid out in compensation to their clients.

The levy also includes the cost of outsourcing. The vast majority of claims are outsourced by the FSCS, which the body said gives it “greater flexibility to handle fluctuating numbers of claims”.

An additional “contingency reserve” of £5.3m is also proposed, to allow the FSCS to levy extra funds at short notice without consultation by the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA).

“Ensuring that the costs advisers pay to support initiatives like FSCS are fair and proportionate is a central part of APFA’s efforts to ensure a better deal for the industry,” Hannant added.

“It comes up time and time again in conversations with members. We’ll study the proposed reduction in detail, and will respond to the FCA in due course.”

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