Brokers are being made to pay for the sins of a distant cousin – Clifford

Brokers are being made to pay for the sins of a distant cousin – Clifford


On reading these words from the Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair when describing the £1bn charge the FSCS intends to levy on the financial services industry, it’s safe to say this was a sit up and take notice moment.

Everyone in our industry will be acutely aware of what those proposals mean – a major increase in the regulatory fees payable by all mortgage advice businesses.

To illustrate this, last year the regular contribution to the FSCS levy for mortgage distribution, the category mortgage advisers fall under, was £1.5m; this year it is forecast to be £22.9m.


Staggering rise

That’s a staggering 1,426 per cent year-on-year rise. Imagine trying to get that sort of price rise through in any other business – it would be considered obscene in the extreme, but yet in financial services regulation land, it’s deemed acceptable.

To put that into context, it means for Stonebridge alone, an unexpected increase in costs to over £1m in regulatory fees during the next financial year.

No business in the land can lie down and accept that massive hike in business costs, without considering how to mitigate the financial hit. For some brokers and networks that will mean a change to their charging structures for sure.

And all this extra cost to pay for previous and future issues in areas of the market most mortgage or protection advice firms have absolutely nothing to do with.


Seething with anger

It is no wonder many firms are seething with anger about the cost increase and what it is required for – to combat failings in the regulatory structure as a whole, and specifically in the pension and investment sectors.

Yet mortgage firms are expected to carry the financial can too. It would almost be comical if it wasn’t so serious.

I’m aware that Stonebridge is not the first firm or industry stakeholder to come out so vociferously against this increase. The reason we do this again is because we have the opportunity to do so – where many others do not.

We feel it’s important to represent the views of our member firms on this topic and others like it. We do not wish for silence to be seen as acquiescence on this.

We also wanted to reiterate our support for organisations like AMI who are lobbying on our behalf and to add weight to its call for any future regulatory review.

As Robert Sinclair says, we need to look “…at how we develop a new approach that gives proper scrutiny of how firms are able to operate within the UK regulatory framework”.

A Treasury Taskforce has been announced to look at this situation but it’s clearly not enough and, quite frankly, comes after the horse has bolted.

Of course, we fully accept the benefits of the compensation scheme and what it offers consumers when firms fail or fail their clients.

However, the complete lack of a level playing field between advice sectors and firms has perhaps never been so stark. It is just grossly unfair.


Montlake sets out AMI priorities as Sinclair commits for at least two more years

Montlake sets out AMI priorities as Sinclair commits for at least two more years


Long-serving chief executive Robert Sinclair added that he was expecting to remain for at least another two years but that it was important to start successions planning for his eventual departure.

Speaking on the latest Brightstar video debate, Montlake (pictured), who is also managing director of advice firm Coreco, said it was “an honour” to have been elected to the position in December as a practicing broker who still saw clients and wrote business regularly.

Montlake explained that while it had been a tough last year with the national pandemic, he felt the industry could take some positives from its situation and how people had come together.

“We’re coming into a very difficult period and its very important we go forward with a spirit of collaboration with the Financial Conduct Authority (FCA), with lenders, with UK Finance, the Intermediary Mortgage Lenders Association (IMLA), other trade bodies and really work together for the good of the industry,” he said.

“Because I’m sensing something we can take that’s positive out of this is that we have all started to talk to each other better and on a deeper a level and understanding the issues we’re going through.

“A more harmonious way of engagement going forward is important and making sure that us as an industry meet the demands of the consumer of the future.”

He emphasised this would mean working together in different ways and making sure that as an industry, despite whatever technology was adopted, advice was still front and centre.

In addition to AMI’s broad agenda working on regulation, Montlake also raised the issue of diversity.

“We’re delighted that Dom Scott of Alexander Hall has joined our board and diversity in financial services is something we’re passionate about and we’re going to work hard to try and do something and change the map on that. So that’s another thing that’s important,” he added.


Sinclair staying

Meanwhile, Brightstar CEO Rob Jupp hosting the debate quizzed Sinclair on how long he would be remaining at the trade body.

Having joined the former Association of Independent Financial Advisers (AIFA) body in 2006, Sinclair was part of the team that formed the separate AMI body in early 2012.

Sinclair noted he was still enjoying his position and did not have any immediate plans to leave, but admitted the time was nearing to begin a succession plan.

“While the board and membership think I’m doing a good job I will stay. There comes a point where you need to work out what your succession plan is and a conversation we will have over next two years is, what is the plan?” he said

“How do we build AMI into a shape that I can move on and out at some point – probably not in two or three years, but four years, possibly.”

“I don’t intend going anywhere in next two, but then you need to think about what that transition looks like.”

Sinclair added that it would be his fourth time of renegotiating the compensation scheme and he feared he could become a barrier to innovation, potentially repeating discussions from previous years, something which he did not wish to happen.


FCA chiefs must take responsibility for ‘darkest day’ and £1bn FSCS levy – AMI

FCA chiefs must take responsibility for ‘darkest day’ and £1bn FSCS levy – AMI


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.



Broker FSCS levy soars as pensions sector ‘blind’ to fraud and bad advice

Broker FSCS levy soars as pensions sector ‘blind’ to fraud and bad advice


Brokers will pay a collective £22.9m towards the more than £1bn FSCS levy in 2021-22, more than seven times the £3m total mortgage advisers contributed during the current financial year.

The initial estimate of £1.04bn to cover the FSCS for the coming financial year is almost 50 per cent higher than the final £700m tally for 2020-21.

The shocking rise is driven largely by pension advice failings, self-invested personal pension (SIPP) operators, general insurance claims and firm failures as a result of the Covid-19 pandemic.

It has drawn frustration and anger across the industry, particularly from those sectors not responsible for the surge.

The regulator is predicting an increase of claims against home finance intermediaries but the sector will still remain one of the smallest contributors to the FSCS’s workload and expenses.

Complaints received are predicted to rise to 1,247, up from around 1,088 for the current financial year – just two per cent of the actual claims anticipated. (See FSCS graph below)

The £22.9m fee for mortgage advisers for 2021-22 is made up of £5.8m to cover its own sector and £17.1m for the wider industry failings.

Mortgage providers will also see an increase in contributions, rising from £1.1m to £8.6m, with £6.4m of that to fund the wider industry.

Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair (pictured) said the need to raise in excess of £1bn to make compensation claims was “a new low in the story of financial regulation in the UK”.

He said: “The dire discovery that the investment and pensions sector has been blind to widespread fraud and poor advice needs direct action by the industry.

“Asking mortgage brokers to pay more for bad pensions and investment advice than they are levied by the Financial Conduct Authority (FCA) for their own regulation is nothing short of a disgrace. The announcement of a Treasury Taskforce is too little and too late.

“On behalf of ordinary advisers who will have to find this money at a time when doing their job could not be harder, AMI requests that the review of future regulatory framework is expanded to look at how we develop a new approach that gives proper scrutiny of how firms are able to operate within the UK regulatory framework.”



Pensions and insurance failings

Announcing the details, the FSCS acknowledged the Life Distribution and Investment Intermediation (LDII) and Investment Provision classes were expected to breach their class funding limits for the second year in a row.

As a result, the retail pool will be triggered for a total of £252m.

It explained the four key factors behind the massive rise in claims costs:


Silver lining

In one small positive, the FSCS revised the forecasted 2020-21 supplementary levy announced in November down from £92m to £78m. This saw the mortgage adviser contribution falling from £2m to £1.5m.

FSCS chief executive Caroline Rainbird said: “Although we are prepared for a difficult and uncertain year ahead, we look forward to working with the industry and the FCA on our recommendations.

“Much more must be done as regulation alone cannot be expected to solve the complex problem of the rising levy. We need multiple interventions and fundamental shifts across the sector.

“I am a strong believer in tackling the root causes of the increased compensation costs and distress caused by failures, rather than the symptoms of the problem.

“We are ready to contribute by providing insights, an independent view on the issues and recommendations that could transform the financial services market.

“It is only by taking these steps in an integrated and coordinated way that we can improve outcomes for consumers and, in turn, reduce the burden of the levy on the industry.”


AMI and IMLA warn of property chains collapsing without phased stamp duty deadline

AMI and IMLA warn of property chains collapsing without phased stamp duty deadline


The Association of Mortgage Intermediaries (AMI) and Intermediary Lenders Association (IMLA) issued a joint statement warning the UK home buying market is at a critical stage and that “it is now likely that many cases will not complete before 31 March”.

IMLA and AMI said they had raised their concerns with the Treasury, noting that a large number of borrowers may not be able to meet the March deadline through no fault of their own with unprecedented demand putting immense pressure on lenders, intermediaries and conveyancers.

Delays in obtaining searches are being combined with complex chains and firms’ capacity to operate in a Covid-safe way.

“The market has processed record levels of new applications from buyers while managing the varied and continuing impacts of Covid-19 on their businesses,” they said.

“Once mortgage offers are issued and borrowers move on to try to achieve exchange and eventually completion, the pressure moves on to conveyancers, who are also facing record volumes of business.”


Widespread collapse in property chains

They issued a stark warning about the potential risks to borrowers and the likely knock-on effects on the market.

Those buying properties for less than £500,000 will pay no stamp duty if they complete in time.

However, if they miss the date they will be liable to pay the tax on the value of the property above £125,000, or over £300,000 for first-time buyers.

“The result could be that borrowers are forced to borrow more funds to cover the costs of stamp duty, at a time when they may be stretched on their mortgage loan and additional borrowing may not be available,” the bodies continued.

“We are concerned that the tax exemption cut-off with no taper could see a widespread collapse in property chains if buyers who planned to take advantage of the stamp duty holiday have not completed before 1 April 2021 and are forced to withdraw.”


‘No plan to extend relief’

IMLA and AMI join fellow trade bodies the Building Societies Association (BSA) and the Association of Short Term Lenders (ASTL) in calling for the taper to soften the cut off.

However, earlier this week HM Treasury confirmed it was not planning an extension to the stamp duty holiday deadline.

“As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief,” Treasury said.

“Stamp Duty Land Tax (SDLT) is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides.”


Borrowers must prepare to pay

IMLA executive director Kate Davies warned borrowers to be realistic about what will happen if they miss the 31 March cut-off date and to plan ahead.

“Those who do miss it will need to be aware of how much stamp duty they may be liable to pay – and have a plan for finding that cash,” she said.

“If they can’t – there is a risk that their sale may fall through – taking with it a number of other transactions if there is a chain.”

She added that lenders, intermediaries and conveyancers will be as upfront as possible with borrowers and manage their expectations.

“We are asking all our members to work to increase post offer operational support, and our broker and conveyancer partners to assess their new business pipelines,” Davies continued.

“This will ensure as many complete before any deadline.

“We want to avoid borrowers losing out – through no fault of their own – and have called for some flexibility to the deadline which would ease the immediate pressure on lenders and conveyancers, and treat borrowers whose cases are already in the pipeline more fairly.”


Brokers should assess pipelines

AMI chief executive Robert Sinclair added: “As the main contact point for the consumer at the sharp end of this, brokers will work hard to keep the consumer informed and warn them of the potential risks they face.

“We are calling on lenders to ensure their conveyancer partners have capacity to deal with the pipeline in front of them.

“I would like all lenders, brokers and conveyancers to assess their pipelines and operational capacity between now and the end of March and give a realistic assessment to their customers of the likely outcomes.

“By working together now we can minimise disappointment. However, I firmly believe with what is already in the legal process, government needs to stand ready to extend the deadline to avoid there being thousands of frustrated and disappointed taxpayers.”

‘Don’t bury your heads’ FCA equity release concerns are not just about ‘dabblers’ – Sinclair

‘Don’t bury your heads’ FCA equity release concerns are not just about ‘dabblers’ – Sinclair


In what has been a muddled year, where mentally it feels like it should be March yet we are nearing Christmas, it’s important that the significance of this regulatory review does not get lost as 2020 draws to an end.

This is particularly the case as the FCA has set out in its recent Dear CEO letter to mortgage intermediary firms that it intends to do further work on lifetime mortgages during 2021.

To refresh, the FCA’s main concerns centre around the equity release sales and advice process, in particular the insufficient personalisation of advice, insufficient challenging of customer assumptions and lack of evidence to support the suitability of advice.


FCA looked at most active firms

These communications combined form a clear message that firms need to take action; they cannot be complacent and think the issues raised do not concern them.

As an industry we should not make assumptions that the FCA review and recent Dear CEO letter only relate to firms dipping their toe into the later life market intermittently – to make that assumption puts us in a dangerous place.

Indeed the 2020 supervisory work was on the dozen most active firms in this market.

It is very unusual for the FCA to publish its findings from exploratory work meaning that its concerns are widespread and not just limited to firms that carry out a few equity release cases each year.

The FCA has also been explicit in that all firms should ensure that their advice processes, including how they record the suitability of advice, are sufficient.

If we believe that this only relates to dabblers in the market, then we are in denial.


Industry bodies have gone quiet

It will take a concerted effort from all that represent the equity release market to ensure there is change and to convey the message on the reality of the situation.

However, there has been a distinct lack of communication from some industry bodies on the actions required and updates on any progress.

Back in June some were vocal in the mortgage trade press about what actions they had planned but have since remained quiet.

There must be more open and transparent dialogue to re-ignite the discussion and ensure the correct level of focus.

The mortgage advice industry will be measured by the way it reacts and moves forward.

Comments made in the FCA review and recent Dear CEO letter should not be viewed as criticisms but rather an opportunity.

An opportunity to ensure regulated advisers take responsibility, not delegate to solicitor checks, and really mean it when we say we put consumers at the heart of everything we do.

We cannot ignore the fact there will be increased regulatory scrutiny over the next 12 months and the industry needs to avoid a situation where the FCA feels intervention and action is necessary.

Now is our chance to improve the perception of this market. With a collective approach this is possible – just as long as we don’t bury our heads in the sand.



AMI fears second charge and equity release advisers not heeding FCA warnings

AMI fears second charge and equity release advisers not heeding FCA warnings


The Financial Conduct Authority (FCA) issued a Dear CEO letter last month to all mortgage intermediaries highlighting concerns with advice in the two sectors.

Speaking to Specialist Lending Solutions, AMI chief executive Robert Sinclair (pictured) said while the sectors had been separated in the FCA letter, there were common threads between second charge and equity release.

“There are concerns people start down that journey and then end up with that product no matter what they say,” he said.

“Also, all the costs end up being paid by those who complete and there are concerns about quality of advice around debt consolidation.”

He added: “I’m concerned that both markets aren’t listening to what the FCA has been saying to them. It is continuing to ask them to think about changes to business models.”


Poor quality fact finds

Sinclair noted that it was expected the FCA would return to examine the second charge sector in 2020 with the coronavirus pandemic delaying that.

But he said the regulator had raised concerns about the quality of advice around debt consolidation in the sectors and the issue of borrower vulnerability.

“They don’t see a great deal of good advice in the suitability letters that go out to people, there’s poor quality in terms of fact find and suitability,” he said.

“This isn’t a standard mortgage and often it’s being taken because they have debt distress, so there has to be a higher level of care.”

Sinclair added that AMI would be talking to its member firms about all the risks and issues but highlighted that the FCA’s vast data pool now meant it was much harder for firms to hide from the regulator’s scrutiny.


FCA scrutiny makes sense

Rob Jupp, CEO of The Brightstar Group, said it was understandable people reacted to news of an FCA review with a jolt of suspicion that something must be wrong with a sector, but noted it was the job of a regulator to review the markets that it regulates.

“Second charge mortgages have come under the remit of the FCA for a relatively short period of time and so it would make sense that it pays particular attention to the market to ensure that it is operating to the standards expected in other areas that fall under the regulator’s charge,” he said.

“The FCA may well find incidents where the advice process has not been up to scratch or fees are deemed to be excessive, but it will also find a lot of examples of excellent consumer outcomes and very good practise by firms that operate across the spectrum of secured lending, treating each element with the same level of professionalism.

“My biggest concern about the second charge market is not that the FCA is looking at it, but that so many brokers still are not, and that by excluding this important product from their advice process they are denying some of their clients the best outcome for their circumstances.

“If an FCA review of the second charge market provides a reminder to brokers that it sits on a level playing field along first charge lending then that can only be a good thing.”


Business models are changing

Brilliant Solutions managing director Matthew Arena agreed that the industry was improving with the benefits of the FCA’s post-credit crunch changes and added that a stable industry was positive for all.

“The fact they are going to revisit this means there are some issues to get to grips with,” he said.

“We focus on our own business and operate very differently to many others; that means low fees and an obligation to consider appropriate alternatives.

“Fees was a longstanding problem in the industry but so much has improved with more businesses than ever operating a similar low fee business model to ours.”

He added the industry has been improving and more mortgage advisers were seeing the benefits thanks to the low fee solutions available now.

“What I will say is that secured loan advice and secured loan packaging is more in depth than it is given credit for,” he continued.

“The level of work involved in offering and demonstrating compliant advice is incredibly high so the sector can justify higher fees than standard first charge mortgages, even where the procuration fees are higher.”


Equity release dabblers

Meanwhile, yesterday in his Mortgage Solutions column, Air Group CEO Stuart Wilson said he believed the FCA’s focus in the equity release sector was on so-called dabblers.

“Historically the regulator has been concerned with advisers who only carry out a very small number of equity release cases every year, and this appears to be a warning to those who may have the permissions and authorisations to provide this advice but who are not necessarily specialists in the sector,” he said.

“In other words, of course you may be able to work in this space, but are you necessarily best positioned to be doing so?

“I suspect the regulator is potentially concerned advisers might be lured into a sector which they perceive as more lucrative, only to give advice which is not appropriate because they may not understand it fully.”


Conveyancers could struggle to complete transactions to meet stamp duty holiday – Sinclair

Conveyancers could struggle to complete transactions to meet stamp duty holiday – Sinclair


The Association of Mortgage Intermediaries’ (AMI) chief executive said the trade body raised concerns with the government about an impending stamp duty “cliff edge” if transactions fail to meet the end of March deadline. 

He said: “The volumes of transactions we’re seeing flowing through might mean there will be issues with the ability of solicitors and conveyancers to complete all of those transactions by the end of March. 

“We’ve made them aware of the issue and told them there will be ongoing discussions regarding the capacity of the market to complete these transactions in an appropriate way so consumers can appropriately benefit from the allowance that’s been given by the chancellor.” 

Sinclair also said brokers should tell clients to be responsive to solicitor enquiries and advise sellers to have everything in place to avoid slowing the process down. 

“Clearly there are some chains that are more complex than others and therefore making sure all the people in the chain are similarly minded to get things done in a speedy manner is key to all of this,” he added. 

Sinclair said he hoped any transactions which did miss the deadline would not result in legal challenges for the broker community but said having discussions and thinking about it now could reduce the chances of that happening. 

He added: “We’re still five months away from this point, so as long as we have good open dialogue and appropriate planning and good dialogue with government as well, we won’t have any issues.  

“The reason I’m flagging this early is to allow proper debate and planning.”


IMLA and AMI join forces to tackle lender service issues

IMLA and AMI join forces to tackle lender service issues


The surveys will be conducted over the next few weeks and the different factors which affect each lender will be examined.  

With the information received, IMLA will work with intermediaries and industry bodies including the Association for Mortgage Intermediaries (AMI) to find possible solutions. 

Since the mortgage market reopened in May, lenders have struggled to maintain service levels as they coped with high  volumes of business. 

Many have resorted to withdrawing products or repricing mortgages in order to manage service levels. An increased need to look at changing customer circumstances more closely has also slowed down underwriting timescales. 

Much of this increased demand has been fuelled by pent up activity during the property market’s lockdown as well as buyers and sellers trying to complete transactions before the stamp duty holiday ends. 

Kate Davies (pictured), executive director of IMLA, said: “The focus of lenders remains, as it should, on acting prudently and lending responsibly within their regulatory commitments and – ultimately – to protect borrowers.  

However, the current situation is clearly continuing to impact service levels and we need to identify the main reasons for this and try to find ways of alleviating the logjams.” 

She added that the association needed to be clear about what was “realistically achievable” with its solutions and try to manage the expectations of borrowers and intermediaries. 

“The Covid-19 crisis has emphasised the need for borrowers to be given good advice about their mortgage options, and I believe that most borrowers will understand and appreciate that good advice and responsible lending may take a little longer in these exceptional times. 

“We now know that we all face further restrictions on our lives – probably for another six months. But we also know, from the way the industry has coped so far, that we are up to the challenge,” she added. 

Robert Sinclair, chief executive of AMI, said: “We have an incredibly busy mortgage market at the moment. While the strong levels of activity we are seeing is certainly a positive sign of the sector’s resilience, it is continuing to present difficulties for lenders as they battle demand. 

“Whether we are advisers or lenders, we are all in this market together and it is vital that we work in partnership to find ways of overcoming these difficulties.  

He added: “This is a welcome step from IMLA towards highlighting and resolving factors that are impacting service levels for customers and we are eager to work jointly with its members as they evaluate their findings and identify solutions to the current challenges we are all facing.”

FCA complaints compensation should come from exec bonuses – Sinclair

FCA complaints compensation should come from exec bonuses – Sinclair


Sinclair also slammed the complaints scheme consultation launched by the regulator in July as a “disgrace” for proposing to cap its liability at just £10,000 per case.

Speaking at the Association of Short Term Lenders (ASTL) annual conference, Sinclair strongly criticised the regulator and said it needed to mirror the industry and accept liability for its mistakes.

“The FCA’s decision to try to run through an eight-week consultation rather than 12 weeks in order to protect itself from criticisms of its own complaints structure was a disgrace,” Sinclair said.

“That’s the only words I can use.

“We were very strong in our response that we were about to submit that they should have done a 12-week response but they’ve now extended that under pressure from the Treasury Select Committee.

“They recognise that they made a wrong decision in the first place – a regulator should not reach that point very often in their careers.”


Cosmetic consultation

The lack of acceptance or meaningful change to anything the regulator did in the consultation also frustrated Sinclair.

He continued: “The complaints commissioner said there were fundamental flaws and failures in handling and responding to complainants and the consultation did absolutely nothing to address anything around that. Nothing.

“The consultation was cosmetic, capping how much they would have to pay while causing distress and inconvenience and capping if they made a mistake at £10,000 per case.

“Businesses would love to get away with that rather than £355,000 which is the cap at the ombudsman service, and uncapped in court. Only this regulator could do that.”


‘The only fair way’

Fellow panellist Ray Cohen, managing director of Jackson Cohen, suggested that would inevitably mean regulated firms would end up paying more to cover compensation.

However, Sinclair argued the FCA should accept the liability themselves.

“The FCA has a bonus pot for all its staff and executives; anything they have to pay out in complaints comes out of that bonus pot – it’s the only fair way,” he continued.

“They said they implemented the senior management regime internally, but there is no liability for anything they do wrong. There has to be liability because there is for every other firm.”

The FCA executive committee has deferred any bonus payment until the report of the investigation into the circumstances surrounding the collapse of London Capital & Finance (LCF) has been issued.