The Investment Management Association (IMA) and the Association of Private Client Investment Managers and Stockbrokers (Apcims) have strongly opposed the regulator's proposed changes to the Financial Services Compensation Scheme (FSCS).
The trade bodies argue a much broader review is needed to tackle the wide range of issues.
They have joined forces to argue that the proposals unveiled earlier this year do not cover the impact of cross-subsidy, particularly when asset managers had to find £233 million to contribute to the £333 million needed in 2011 for intermediary defaults.
'Any wider review must consider the appropriateness of recovering extremely high levels of compensation claims. The IMA and Apcims would expect the FSA to consider whether improvements can be made to the supervisory processes to mitigate the risk of future claims,' the bodies said.
While few debate the need for the FSCS, many discretionaries and asset managers feel that at times the payment can be too high, and penalises the parts of the industry that adhere to the rules, rather than the pockets which do not.
Moreover, after the suprise rise in FSCS some 12 months ago to compensate for the Keydata failings, a number of firms feel they have tobudget for payouts they are unable to accurately assess.
Guy Sears (pictured), IMA director of wholesale, said that more needs to be done to assess the needs of the industry when it comes to the FSCS.
'We’re disappointed to see that the bulk of the proposal concentrates on improving administrative processes within the FSCS at a time when the scheme rules need a complete overhaul,' he said.
Ian Cornwall, Apcims director of regulation, added: 'The proposals appear to address a limited number of ad hoc issues associated with the FSCS and it is unclear why it has been published now given a further consultation paper on the FSCS is due to be published shortly. Certain issues, such as the definitions of eligible claimants, addressed in the current consultation paper may also need to be revisited in the further consultation.'