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Industry demands clarity on 'unacceptable' FSCS bills

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Industry demands clarity on 'unacceptable' FSCS bills

Senior figures in the industry are calling for urgent clarity on how much investment managers will have to pay to cover deficits in the financial services compensation scheme (FSCS) for 2010 and 2013.

Last week the FSCS said it will pay back £71 million to firms that had resubmitted tariff data for 2010/11, following its decision to exclude fund income from the catchment. 

But the return means there is now a £33 million deficit in funds used to cover the 2010/11 period, and managers will have to pay their share.

Apcims’ director of regulation Ian Cornwall described the bill as unacceptable and said he was hearing ‘huge disquiet’ from members over the levy, and empathising with Charles Stanley after the charge swallowed 40% of its pre-tax profit. 

‘There is huge disquiet about the payments [investment managers] have been forced to make for activities that bear no relation to their activities,’ he said. ‘Charles Stanley said it was an additional tax on their activities and that reflects that what they are being forced to pay on the compensation scheme on a continuous basis is unacceptable.’

The levy comes in addition to a £25 million shortfall projected for the 2012/13 period, which managers will also have to cover. The IMA called for details of the exact charges that firms will face to be released as soon as possible.

‘What we don’t know is how it’s going to be shared out, how that extra money is going to be split among firms. We want that to be released quickly and for people to know how much they are going to pay and when,’ a spokesperson said.

The trade body reiterated its proposal that income derived from funds should not be excluded from tariff data. ‘We need to get to a position where everyone should be [calculating tariff data] on the same basis,’ it added.

A senior executive from a national wealth manager echoed the calls for urgent clarity on how much his business would be expected to pay, especially as the firm had previously forked out several million in the interim levy.

‘It’s difficult to know how this will impact on us because obviously for the deficit that exists, we don’t know quite what our share is going to be,’ he said.

He also took issue with the exemption of fund income from tariff data, arguing there is still a risk.

‘Do I agree that there isn’t a risk from firms that have exempted income? I do think there’s a risk and where there is a risk they should pay.’

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