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Backstage with Keith Richards

12th July 2016

 

Many advisers were left disappointed last month when the idea of a product levy was deemed outside the scope of the current review into FSCS funding.

As I've highlighted in this blog several times before, Treasury and the FCA are serious about reforming the current funding system, as evidenced by the fact that FSCS reform is the first consultation to be launched as part of the Financial Advice Market Review.

The rising cost of delivering regulated activities however, remains a concern, as well as the growing pool of legacy risk which has accumulated within the FSCS over two decades of industry contraction.

The burden of this expanding pool of risk continues to fall on a shrinking number of contributors, with further consolidation likely in the future if action is not taken.

The decision to exclude a product/investment levy from the FSCS review has restricted its scope to deliver a fairer and more sustainable solution to these ongoing issues, even if ultimately an investment levy is discounted after careful consideration. Yesterday therefore, I wrote to the Chancellor, George Osborne seeking government consideration to broaden the consultation to include alternative funding options, including a product levy.

This is not to say that a product levy should be regarded as the favoured outcome of the review, but rather that in order to deliver the fairest and most effective sustainable solution, it is important that all possible alternatives are considered, compared and debated. The proposal of an investment/product levy would not mean that the sector would be excluded from making a contribution but this should be at an appropriate level.

Regulation is of course a key component in providing consumer protection and influencing good outcomes for the general public, but it is becoming increasingly unreasonable to continue with an outdated funding system that levies unfairly against a smaller number of contributors in a totally different post-RDR landscape.

Increasingly unfair cost pressures on good firms and their clients are compounded by the fact that regulatory fines were originally intended to influence behaviours and help fund regulation, thereby providing a dividend for the most compliant. Instead, all fines now go to HM Treasury and the increased cost burden is being shared by a reducing pool of individuals and firms.

As always, I welcome your views and ideas on FSCS reform - please direct any constructive feedback to: membership@thepfs.org

Judging Excellence

As many of you would be aware, the Personal Finance Society is gearing up for its annual awards programme in November, with a revamped list of award categories.

For the first time, we will be formally recognising the importance and influence of personal finance journalism.

Recently, I met with other members of the media awards judging panel, where we shortlisted three finalists in each of this year's three national media awards.

Next month, Personal Finance Society members will have the opportunity to vote for two trade press awards. The trade press plays a significant role in stimulating debate in our sector and raising public awareness of the issues that we are all invested in and passionate about, and so I encourage you all to place your votes when voting begins next month.

This week, I was also privileged to chair the Schroders UK Platform of the Year awards judging panel, tasked with awarding excellence and achievement in platform technology.

Annual awards offer an opportunity for participants to display their commitment to their clients and the profession alike. I urge you to consider applying for a Personal Finance Society Award by visiting our website and submitting your application by 12th August.

 

Best wishes,

Keith

 

About the Blog

In this blog Personal Finance Society CEO Keith Richards will be keeping you up-to-date with all the Personal Finance Society news, projects and initiatives that we have in the works.

Read past editions of the blog »

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