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FSA expects 'opt-in' to slash Cru redress and avoid FSCS bills

FSA expects 'opt-in' to slash Cru redress and avoid FSCS bills

The Financial Services Authority has said it expects introducing a client 'opt-in' to its Arch Cru redress scheme will slash the adviser bill from £110 million to as little as £20 million and avoid large levies from the Financial Services Compensation Scheme (FSCS).

The FSA has amended its original proposals, which would have required advisers to review all their Arch Cru sales, to review only those where clients decide to opt in to the scheme.

The regulator said it expected around 15% to 30% of consumers to opt in to the scheme, leading to redress of between £20 million and £40 million, well below the anticipated £110 million cost to advisers of its original plans.

The FSA said the client opt-in 'responds to criticism that consumers may not wish to seek redress from their advisers and should reduce the cost of the scheme for the wider sector as a result of FSCS levies'.

It said it estimated between £3 million and £7 million Arch Cru compensation would come from the FSCS.

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