PIMFA welcomes lower Financial Services Compensation Scheme levy forecast

11 November 2021

PIMFA welcomes lower Financial Services Compensation Scheme levy forecast

PIMFA, the trade association for wealth management, investment services and the investment and financial advice industry, welcomes the reduction in the Financial Services Compensation Scheme (FSCS) levy forecast for next year to £717m. Although we note that it is still an increase on the previous year.

Liz Field Chief executive of PIMFA commented: “We are encouraged that the FSCS levy forecast us lower for the coming year – albeit an increase on the previous year. PIMFA remains absolutely clear that the current levels of FSCS funding are unsustainable for the industry and can only be addressed once the drivers of FSCS claims are suitably addressed.

“This means, as we set out in our paper on FSCS reform, improving the standard of supervision of the sector, looking at the market distortion at play as a result of the FSCS and improving the provision of intelligence sharing and ensuring that it is acted upon.

“To the FCA’s credit, they have acted upon a number of these recommendations over the past year, but it is clear to us that we will only truly begin to see the fruits of that labour in the medium to long term. Given the basic tension in the construct of the levy – funding of the FSCS is forward looking while claims against it are backward looking – and the likelihood for significant increases in the future, we are clear to today that the FCA and Government should consider short-term easements alongside long-term reform.

“In the short-term, we are again calling on the Government to consider the use of FCA fines to help fund the FSCS as a gesture of goodwill to an industry which has been badly let down.

“Longer term it is clear to us that the construction of the funding model for the FSCS needs to be reformed and we look forward to engaging on this. However, there are some fundamentals still to be actioned and resolved as outlined in our FSCS reform paper. We will continue to engage on behalf of the sector to this end.

“We will, as always, continue to work closely with the FSCS in understanding the drivers on our sector. To that end we believe that they deserve great credit both in the increase in recoveries over the previous year, as well as obvious and concerted efforts to be more transparent with industry in understanding the provenance of these continued rises.”

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About PIMFA – the Personal Investment Management & Financial Advice Association

• PIMFA is the trade association for firms that provide investment management, investment services and advice to everyone from individuals and families to charities, pension funds, trusts and companies.
• The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 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 recommendations to the FCA regarding the Future of Advice, the Future of Supervision, & 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 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