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Apfa hits out at 'missed opportunity' for FSCS reform
by Michelle Abrego on Jan 18, 2013 at 10:29
The Association of Professional Advisers (Apfa) has hit out at the Financial Services Authority’s (FSA) reform of the Financial Services Compensation Scheme (FSCS), branding it a ‘missed opportunity’.
The trade body has criticised the regulator for sticking with plans to raise the investment intermediary threshold from £100 million to £150 million.
Chris Hannant, Apfa policy director, said: ‘We are disappointed that the FSA hasn’t announced a more sensible threshold for investment intermediaries.
‘The regulator must recognise that the retail distribution review and the wider economic environment will affect adviser revenues. The lack of revision to the threshold for investment intermediaries is a missed opportunity to build a more stable and affordable funding model.’
Apfa did though welcome the FSA’s move to consult on providers cross subsidising parts of the Financial Services Compensation Scheme (FSCS).
In last year's funding review of the FSCS the FSA proposed setting up a retail pool, a collective resource funded by Financial Conduct Authority (FCA) regulated intermediaries and investment providers which would be triggered if one or more of those classes reached their threshold.
Under the original proposals providers which fell into the Prudential Regulation Authority (PRA) side of the FSCS funding model would not contribute to this pool.
However, 'in light of industry concerns about this approach' the FSA has opened a month long consultation on a proposal that all providers should make contributions when the pool is triggered by the failure of an intermediary.
It has proposed that the retail pool would include contributions from banks, insurers and home finance providers.
‘We’re pleased that the regulator has listened to Apfa and proposed to reintroduce a cross-subsidy if intermediary class thresholds are breached, as it is important that product providers retain some responsibility for their products,’ said Hannant (pictured).
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