FSCS levy forcecast of £1bn compensation bill is scandal that shows regulation is failing both consumers and firms

22 January 2021

FSCS levy forecast of £1bn compensation bill is scandal that shows regulation is failing both consumers and firms

PIMFA, the trade association for the weatlh management and financial advice industry, today has reacted with disbelief at the FSCS compensation forecast, that in any other industry would be considered a natioanl scandal. Reform is urgently needed.

Tim Fassam, Director of Government Realtions and Policy at PIMFA comments: “In any other sector, a forecast for compensation of over £1bn would be the focus of national scandal – £1bn of compensation represents £1bn worth of financial loss, emotional stress and economic hardship for thousands of UK consumers.

“We cannot continue to normalize this level of loss, accepting that the compensation scheme will hopefully pick things up on the other side, every single person who has had to claim on the FSCS has received a poor outcome that it would be better to avoid. This is a further sign that the cost of compensation is truly out of control.

“This cost is a symptom of a system that fails both customers and the industry. Reform is now urgent but will take time. HM Treasury must find other sources of revenue to cover these extreme costs. The fairest source are FCA levies, which ensures polluters pay and it remains an industry funded regime.

“We have put forward a number of recommendations to the government and the regulator, which we think will reduce the bill over time but crucially ensure that firms do not fail in the first place. We want to work collaboratively to ensure that these continued rises in compensation claims are brought to an end.’

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Notes for Editors

About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide investment management and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.5 trillion in private savings and investments and employs over 55,000 people.
• PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families, to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
• PIMFA leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena.  Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments.
• PIMFA has made numerous reccommendations to the FCA regarding the Future of Supervision and the FSCS levy  – read more.
• PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
• Further information can be found at www.pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

• Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376
• Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225