AMI chief executive Robert Sinclair blasted the investment and pensions industry and regulators for failing to get a grip of poor practices which has led to a levy of more than £1bn for the 2021-22 financial year to refund customers.
And he lamented the unfairness of the excess levy being borne by mortgage advisers, which will see brokers coughing up an additional £17m – almost as much as it costs the FCA to oversee the mortgage market for a year.
Speaking on the latest Brightstar video debate, Sinclair said: “I was incandescent with rage because this was the darkest day when an industry will have to find £1bn to pay for malfeasance. The FCA has let this happen, it is wrong.
“Somehow under Bailey and Woolard’s watch at the FCA all of this happened and nobody cried foul and stopped it.
“Across the whole of investments and pensions nobody in the industry is going ‘This isn’t right.’ Who’s been blowing the whistle on these people and firms?”
Mortgage industry cleaning house
Sinclair explained that there is “so much fraud and bad practice going on in the pensions and investment market” it is surpassing the £240m sector FSCS cap and heading towards £500m.
“[That’s] the amount the compensation scheme needs to make good the crap that is going on in that marketplace,” he said.
“Some of it is outright criminal fraud, some of it is just bad advice by advisers. A lot of fraud comes from the pension freedoms.”
And Sinclair noted the mortgage industry had not suffered such problems because it had taken care of its own house by getting rid of bad advisers and by lenders striking them off.
“In pensions and investments, there’s been none of that, [from] the large manufacturers or people in the advice industry,” Sinclair continued.
“Because we, all of us in the advice community, need to sort this out. There are ways to do it, but at the moment the political appetite is not going to be there.”
Not going to win that battle
It appears there is little prospect of getting a reduction for mortgage brokers before invoices are sent in the spring, unless the pensions and investment sector collectively agrees to fund all its fees.
Realistically, any adjustment to the way levies are structured will require Treasury and FCA intervention.
“I could lobby as hard as I want, but I don’t think I’m going to get anywhere in the next two to three months to stop it happening. I’m worried about it and I’m really unhappy about it, but I don’t think I’m going to win that fight,” Sinclair concluded.