Copland (pictured) has been campaigning for several months to urge mortgage brokers to respond to the Financial Conduct Authority’s (FCA) proposals on restructuring the levy. The mortgage club boss disagrees with the options laid out by the regulator for the levy restructure, which is designed to compensate consumers who have been mis-sold products and services by firms unable to stump up the compensation.
Under the current system, advisers are billed for the estimated amount of compensation required for a class of products which they are responsible for giving advice for. However, life insurance has been placed in the same class of products as pensions, which means that when bad pension advice is given – mortgage brokers who sell life cover have to pay up.
Copland’s suggestion for a fairer FSCS levy is to place an additional premium on financial services products, based on a risk weighting attached to the product. This would be paid for by the consumer and collected by the product provider. However, a consumer-funded product levy was not one of the options put forward by the FCA. Copland has also suggested separating life products from pensions, which he said would reduce the amount which brokers would have to pay.
TMA has received some success from its campaign, with a recent survey of its brokers revealing 47% are planning to respond to the consultation, but Copland fears that the complexity of the consultation paper is deterring more brokers from showing their support.
“Whilst we’re pleased that a significant amount of our Directly Authorised (DA) advisers already have, or are planning to respond to the FCA consultation, there are still some who remain deterred by the scheme’s complexity.
“The FCA should therefore make the outlines of its new proposals clearer for mortgage and protection brokers. With only a week to go until the consultation ends, we will continue to fight against this levy in the interests of our DAs.”
Brokers have until the 31 March to respond and can still do so by visiting the FCA website and answering Q14: What are your views on the different funding classes we have set out here? Do you have any alternative proposals?