Responding to the release of the FCA's Consultation
Reviewing the funding of the FSCS, Keith Richards,
Managing Director (Engagement) at the Chartered Insurance Institute
and Chief Executive of the Personal Finance Society, has welcomed
the opportunity for stakeholders to provide feedback on potential
reforms to both the FSCS levy and the cost of professional
indemnity insurance, and the suggestion that the burden of FSCS
funding will be shifted to higher risk segments of the
"It is pleasing that the FCA has broadened its review of FSCS
funding in response to feedback from the sector."
"The Personal Finance Society first proposed the idea of merging
the FSCS levy with the cost of professional indemnity insurance,
and I'm pleased that this consultation will offer stakeholders an
opportunity to put forward their views on potential reforms of both
"We have previously expressed our concern about the current
shortfalls of PII, and we are pleased that the FCA has acknowledged
these by proposing restrictions on policy excess levels and
restricted use of exclusions. These proposals need to be examined
in greater detail, and it is equally as important that greater
competition in the PII market is achieved through the current
"While it is disappointing that the FCA has effectively ruled
out the possibility of introducing a product levy, it has
acknowledged that there are other ways it could more clearly link
product risk to FSCS charges."
"The concept of a risk-based levy, where firms could be eligible
for a discount if their behavior reduced risk, has merit and is
certainly worth considering in more detail."
"It is pleasing that the FCA has acknowledged in its
consultation paper that the burden of funding the FSCS has fallen
disproportionately onto intermediary firms in recent years, however
the idea of shifting the burden to product providers should be
approached with caution."
"What's most important is that the burden of FSCS funding is
shifted to higher risk segments of our sector. Given the language
used by the FCA in its consultation paper, I am optimistic that
this will be the result of its review."