View more on these topics

Comment: Time for a separation of powers with FSCS

David-Copland-700x450.jpg

The FCA must split the life and pension pot; it is unfair that mortgage brokers have to pay to compensate pensions

The Financial Services Compensation Scheme life and pensions levy is to mortgage intermediaries what last year’s cruciate ligament knee injury was to West Brom footballer Chris Brunt: crippling and unfair. However, just as Brunt has fought back this season, we can fight the levy.

Levity aside, the FCA is consulting the industry on revising the way the compensation scheme is funded. The fact is, mortgage and protection advisers are currently paying for poor advice on pension products by firms that no longer exist.

What is more, the regulator expects these costs to rise. In fact, it plans to levy a further £171m for the life and pension intermediation sector in 2017/18. That is why we recently called on brokers to respond to the consultation, and to Q14 in particular, which asks: ‘What are your views on the different funding classes we have set out here? Do you have any alternative proposals?’

We think the best alternative is to place a product levy on each product relative to its risk. Adding an extra cost to individual products is not only fairer – as you are insuring your own risk – it is also more transparent for the consumer. They see the cost up front and are not later hit by indirect service charges that inevitably filter through from providers and brokers.

The crux of the issue, though, is that the FCA must at least separate the life and pension pot; it is simply unfair that mortgage brokers have to pay to compensate pensions.

The regulator is giving us an opportunity to respond and I hope we take it. I expect to see column inches filled with articles about the levy until the 31 March deadline has passed.

David Copland is director of TMA Mortgage Club

Recommended

Business-Growth-Drawing-Chart-Performance-700x450.jpg

Expected SDLT surcharge profits hiked by £600m for 2016/17

The Government expects its stamp duty surcharge on buy-to-let properties and second homes to raise an extra £600m for the 2016/17 year. The Government announced a 3 per cent surcharge on buy-to-let and second properties in November 2015, but the charge was not launched until April 2016. Budget documents released today say: “The four month […]

Payment-Fine-Currency-Money-700.jpg
1

Four estate agents fined for illegal price-fixing cartel

Four Somerset estate agents have been fined more than £370,000 by the Competition and Markets Authority after admitting illegal price-fixing. The businesses – Abbott and Frost, Gary Berryman Estate Agents (and parent company Warne Investments), Greenslade Taylor Hunt and West Coast Property Services (UK) all took part in a price-fixing cartel in the Burnham-on-Sea area. […]

UK-Houses-Building-Homes-700x450.jpg

House prices edge up in February, says Halifax

UK house prices rose 0.1 per cent in February, according to the latest Halifax house price index. The small rise follows a 1.1 per cent drop in January. The average UK house is now worth £219,949, according to Halifax. Halifax housing economist Martin Ellis says: “House prices in the three months to February were 1.7 […]

9 October thumbnail

Johnson Fleming set to host webinar on auditing auto-enrolment schemes

With 23 auto-enrolment compliance notices issued by the Pensions Regulator, and an evolving legislative landscape meaning previously compliant schemes may now be in breach of regulation, now is the time to think about auditing your auto-enrolment scheme. Johnson Fleming is hosting a webinar on 9 October at 11:00 on how to audit your scheme to ensure compliance, avoid breaches and fines and overcome data issues.

Newsletter

News and expert analysis straight to your inbox

Sign up
Comments
  • Post a comment
  • Chris Hulme 9th March 2017 at 5:40 pm

    I understand that around 80% of the increase in the levy is down to the practices and failings of just one firm. The issue isn’t just about fairness on who covers who’s liability, although that is a major part of the problem – this is also about the numbers capable of funding such past issues. As it stands, the FSCS and the Regulator expects less than 10,000 mortgage and protection brokers to seemingly cover the costs and failings of the whole industry that has gone before it – an industry that was at one point 35 times bigger in terms of head count than it is now. This industry now comprises the cream of the cream and is the best it has ever been in terms of client care and diligence. The regulator needs to understand that and call a halt to raiding its [industry] pockets time and time again – after all, these costs can only be passed on to one final source – the consumer, the client, the borrower, the life assured – the very person the Regulator and FSCS purports to be protecting.
    As brokers and advisers we have a chance to contribute in this consultation paper. Don’t let it be rammed through your bank accounts Brexit style – have your say and stop the onslaught of levies!