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FSCS hits IFAs with £28m additional levy

by Jun Merrett on Nov 30, 2012 at 13:18

FSCS hits IFAs with £28m additional levy

Investment advisers face being hit with a further £28 million levy by the Financial Services Compensation Scheme (FSCS) due to the collapse of Pritchard Stockbrokers and Worldspreads.

The FSCS has predicted a £25 million interim levy on the investment intermediation sub class.

It said the main reason for the expected increase in the compensation payments was due to claims against Pritchard Stockbrokers and Worldspreads but is also expecting to pay out more for MF Global UK Limited, CF Arch Cru funds and Rockingham Independent in 2012/2013.

The scheme said it did not expect the higher costs to trigger a cross-subsidy on fund managers in 2012/2013.

So far the FSCS has levied £66 million on investment advisers this year, leaving £34 million for further compensation costs before cross-subsidy is triggered.

Investment advisers will also face an additional cost of £3 million as a result of a redistribution levy because of £36 million shortfall in FSCS funds.

26 comments so far. Why not have your say?

EURYN OWEN

Nov 30, 2012 at 13:36

Give the cat another canary!

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John Boy

Nov 30, 2012 at 13:50

seems fair... I'll bend over shall I.....

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sol trader

Nov 30, 2012 at 13:51

At last, Pritchard Stockbrokers actually sounds like a British institution.

What I don't understand is, if I went bust, I would lose my ISAs, my house and my wife before the FSCS would kick in. But even so, I can't see how it would affect my clients as I don't have any of their money.

so what have these people done with the money? and why am I paying for it?

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NearlynolongeranIFA

Nov 30, 2012 at 13:52

Merry Christmas and a Crappy New Year from the lovely FSCS.

Good start to our slashed income forecast / budget for the New (RDR) Year; paying out for a bust stockbroking firm and a spread betting firm.

I am considerring regsistering our firm as a Charitable Foundation - as opposed to a restricted or independent advisor firm!

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Julian Stevens

Nov 30, 2012 at 13:55

Another round of carpet bombing of the IFA sector. What the hell is what I do to do with stock broking? And Worldspreads? Never even heard of that one, though I'll bet it wasn't an IFA firm.

Still, never mind, it's all part of the FSA's prejudicial agenda against small IFA's, you know, the one that Hector Sants told the TSC in March 2011 that the FSA doesn't have. Pull the other one Hector, it's got bells on.

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Jamie Newell

Nov 30, 2012 at 14:05

If the FSA addreesed mandatory PIrun off for departing advisers and put in place minimum standards and terms for PI then this would reduce the levy substatially for advisers. chances?

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P L H

Nov 30, 2012 at 14:09

Dear NMA,

Are you secretly in the pay of the alcohol industry? Do you save these headlines for Friday afternoons deliberately to drive all IFAs straight to the nearest bar to drown their sorrows?

Or do you just enjoy reading all the comments?

Next week, some good news please.

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P L H

Nov 30, 2012 at 14:10

Dear NMA,

Are you secretly in the pay of the alcohol industry? Do you save these headlines for Friday afternoons deliberately to drive all IFAs straight to the nearest bar to drown their sorrows?

Or do you just enjoy reading all the comments?

Next week, some good news please.

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elaine birch

Nov 30, 2012 at 14:21

I recently was asked to act for a managing partner of a large firm of solicitors. When I put my fee proposal before him he said that £200 an hour was too much and that £650 was too much for a report on what he should do with his SIPP to provide a certain income in just a few years time.

Since then I have discovered that a tax adviser with a similar turnover and client base to me pays 1/10th of what I do for PI cover and has no drain to he FSA, FSCS, FOS, MAS. I worked out that about 12% of my tunover is down to various regulatory & compliance costs. Thats without a hike in FSCS for next year.

The tax adviser in question was shocked and I am considering putting this on my invoices as a seperate disbursement so that clients appreciate the true cost of being an IFA.

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NearlynolongeranIFA

Nov 30, 2012 at 14:37

Elaine B

Nobody has a clue about this pathetic state of affairs except us idiots who have to pay these truly ludicrous business costs just for the privilege of saying "hello" to a client!

We actually have a nifty pie chart we have great delight in showing clients which illustrates our firms income and where it all goes (NB diitto - our PII piece of paper and our FSA / FSCS piece of paper costs about 15% of our gross fee income) .

The thinnest, tiny little sliver in the whole pie chart is the director's earnings!!!!!!!!!!!!!!!!!!!

Nuff said

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Adam Smith

Nov 30, 2012 at 14:40

@ PLH

Don't forget that Citywire is itself an adviser firm...

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IFA1

Nov 30, 2012 at 14:40

they best hurry up and get billing, otherwise they will miss out on the IFA departing on the 31st December.

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Adam Smith

Nov 30, 2012 at 14:46

@ Sol Trader

"so what have these people done with the money?" Well, according to the FSA's supervisory notice dated 10 February, they "allowed client money to be used on Pritchard's own account and not that of clients".

http://www.fsa.gov.uk/static/pubs/final/pritchard_stockbrokers_limited.pdf

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Anitaki

Nov 30, 2012 at 14:50

most of which most people have never heard of, .......

.........until asked to, sorry l mean TOLD to, stump up for them!!

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Half Baked

Nov 30, 2012 at 14:52

Thank you NMA. Just like every friday, we get one of these articles to help fill the gap between lunch and the weekend.

Posters, Enjoy!

I'm off to the pub.

Cheers

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Bob Donaldson

Nov 30, 2012 at 14:53

Looks like Turkey's out for Christmas. Kids will have to make do with span and chips and a small plastic toy under the tree!

Well done FSCS you have spoilt my December.

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NearlynolongeranIFA

Nov 30, 2012 at 15:03

Bob D

To paraphrase Monty P ... "You were lucky !! ... we used ta dream of havin' a Turkey in our house!!"

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Julian Stevens

Nov 30, 2012 at 15:22

If they "allowed client money to be used on Pritchard's own account and not that of clients" ~ that's fraud and, as such, isn't it a matter for the police and the CPS?

Or have the FSA and FSCS now decided, in their untouchable and unchallengeable omnipotence, that IFA's must cough up not only when a provider goes down but when somebody misappropriates client monies?

For Christ's sake, at this rate there'll be no bounds to what we're forced to pay for. This is beyond being beyond a joke.

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Jonathan Kirby

Nov 30, 2012 at 15:56

And how many IFA firms will still be around to contribute to this totally unjust levy?

@ Nearlynolonger an IFA

Perhaps you could eat the pie chart?

Happy weelend

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Jonathan Kirby

Nov 30, 2012 at 16:03

Or weekend even!

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Chris Miller

Nov 30, 2012 at 16:12

But seriously....

I heard that a guy in outer Mongolia, sitting in his yert, advised his mate to go into a collective investment; a herd of yaks.

The yaks died.

The guy with the dead yaks killed the guy in the yert.

I hear on good authority that the FSCS has accepted the claim for the dead yaks and will be raising another interim 'yak levy' in the intermediation class.

The whole FSCS liability net spreads ever wider . The yak story is just as plausible as the WORLDSPREADS????? errr ????? link back to IFAs

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James Clancy

Nov 30, 2012 at 16:31

On Monday morning NMA reported the fine by the FSA on UBS for £29.7m. Today you reported additional levy of £28 million by FSCS

Why don't you send the two links to the FSA.

If they deduct one from the other they will still have £1.7 million or their Christmas party.

Every one would then be happy for the festive season that in most eyes start tomorrow

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Papershuffler

Nov 30, 2012 at 17:33

I'm sorry to write, but more to come next year........

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philip spierling

Nov 30, 2012 at 20:18

Our PI renewal just came in at an increase of just over 30 percent. Our fsa,fscs,fos and mas fees also increased by around 38 percent. Now we have extra Levys to pay on top of this.

Please don't ask why we will be increasing our fees and charges in 2013, it should be glaringly obvious that we will have to pass the cost on to our clients

If fees and Levys along with every day business costs keep escalating at this pace and with scant regard to the advisers and their practices and work load it will become uneconomical to run a financial practice due to constant fee and regulatory pressures.

Business need to have some idea of their budget planning for the year without unknown hefty bills landing on their door mats for situations that were not created by them.

It is unfair

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Stephen Baxter

Dec 12, 2012 at 10:33

Concerningly I have just spoken to the FSA about this and they asked me to direct them to the web page on NMA in order that I could give them the information on the potential interim levy!

Left hand and right hand....

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Julian Stevens

Dec 12, 2012 at 12:27

You must have spoken to one of the FSA's thousands of drones who do their own little job in some corner or other but who have no idea about the bigger picture.

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