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Response to release of FCA Consultation Paper

News

Publication date:

14 December 2016

Last updated:

14 November 2018

Author(s):

Chartered Insurance Institute

Keith Richards 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 sector.

"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 systems."

"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 review."

"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."

This document is believed to be accurate but is not intended as a basis of knowledge upon which advice can be given. Neither the author (personal or corporate), the CII group, local institute or Society, or any of the officers or employees of those organisations accept any responsibility for any loss occasioned to any person acting or refraining from action as a result of the data or opinions included in this material. Opinions expressed are those of the author or authors and not necessarily those of the CII group, local institutes, or Societies.