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FSCS hits IFAs with £28m additional levy

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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.

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