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FSCS to pay back £71m but additional levy for 2010/11 expected
by Annabelle Williams on Nov 30, 2012 at 14:52
The Financial Services Compensation Scheme (FSCS) is to pay back £71 million to fund management and investment intermediary firms which have resubmitted tariff data for 2010/11 – the year of the massive £336 million interim levy.
However, the returning of cash to the industry now means a shortfall in funding for compensation claims in 2010/11, and firms face an additional £36 million redistribution levy to cover the gap.
This historic shortfall is likely to see a £33 million levy weighed on investment fund managers, and £3 million on investment intermediaries - who today learned of an additional £25 million shortfall in FSCS funding for 2012/13 thanks to the failure of Pritchard Stockbroker and spreadbetting firm Worldspreads.
The news follows the FSCS' decision in August that income derived from funds would be exempt from firm’s tariff data, and more than 400 firms chose to resubmit their data in the hope of clawing cash back.
Claims from firms with in-house funds totalled over £89 million, and while the FSCS said it had accepted £71 million worth of claims, it rejected £26 million in claims.
The bulk of the money is being returned to fund management groups, who will receive £68 million back, while firms classed as investment intermediaries will see £3 million returned.
Cash is still being returned to groups, in the form of credit notes from the Financial Services Authority (FSA), but firms will have to wait until early 2013 to hear of the final sums expected for both FSCS levies - 2010/11 and 2012/13.
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