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PTFS blames ‘flawed’ FSCS levy for member fee rise

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  • 04/09/2015
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PTFS blames ‘flawed’ FSCS levy for member fee rise
PTFS director David Carrington has slammed the Financial Services Compensation Scheme (FSCS) levy for being ‘fundamentally flawed’ after recent charges caused the network to alert members of an imminent fee hike.

The network wrote to its appointed representatives telling them their fees would increase from 1 October.

Carrington (pictured), sales and marketing director for Personal Touch Financial Services (PTFS), said he had raised his concerns about the levy to the Financial Conduct Authority (FCA) and believed that cost to firms was being applied ‘indiscriminately’.

He said: “I feel particularly frustrated by having to pass on these charges to our members as we were able to reduce our own fees for the vast majority of our members earlier in the year when we introduced our quality-based pricing approach.”

PTFS, along with other firms, received a double blow from the FSCS when it charged firms retrospectively for an additional levy from last year and this year in one swoop. Carrington said the increase stemmed from the life and pension portion of the fee which covers protection, the reason mortgage advisers are liable to pay the charge.

In its note to members, PTFS said: “We believe strongly that the current method of allocation of FSCS levy is flawed and we have raised our concerns directly with the FCA on a number of occasions recently. In addition we continue to support the active lobbying campaigns of AMI [Association of Mortgage Intermediaries] and APFA [Association of Professional Financial Advisers].”

It continued: “The levy is indiscriminate and applies to all firms, irrespective of the type of business written. It’s important to note that Personal Touch receives no monetary gain from your regulatory fees as we simply pass on the charges imposed by the regulator.”

PTFS said an increase in the cost of its Professional Indemnity (PI) cover had also had an effect on the increase in member fees but said that its 12% insurance increase was well below the industry average rise of 25%.

 

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