A report published by Citywire last week showed that the FCA had ruled out the option of a product levy as part of its review of the FSCS levy.
The proposed funding overhaul would see a premium charged on products and investments, which Tenet said would avoid the need for advisers to continually factor in ongoing increases in their fee structures, creating greater transparency.
Greenwood said the regulator’s refusal to consider the proposal on the grounds that new legislation would need to be drafted “didn’t make any sense”.
“How can that possibly be cited as an excuse for not reforming something so urgently in need of improvement?” he said.
“Hiding behind the need for parliamentary intervention is deliberately evading the issue. Costs are constantly increasing and in a reducing industry, the impact on small and large firms is becoming untenable. Even more frustratingly, the levy is currently being paid by those who did not cause the problem. The ‘innocent’ are paying for the ‘guilty’.”
Tenet and the Association of Professional Financial Advisers have worked with Labour MP for Mansfield Sir Alan Meale to table a parliamentary motion on the matter. The motion urges the government to work toward a more sustainable advice sector while requesting that the FCA reconsiders the product-based levy solution.
Greenwood insisted that other suggestions put forward for funding of the FSCS would not be satisfactory.
“The promise to look at ‘smoothing out’ completely fails to address the underlying problem,” he added.
“Meanwhile, a risk-based solution would simply result in people trying to manoeuvre around any obstacles and ironically encourage consumers to be reckless – in the knowledge that if everything backfires, they’ll simply get their money back.”