Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

New City Initiative fights corner for SMEs on FSCS reform

1 Comment
New City Initiative fights corner for SMEs on FSCS reform

The New City Initiative (NCI), a think tank backed by industry heavyweights including Stanhope and Odey, is taking the FSA to task on Financial Services Compensation Scheme (FSCS) reform.

Daniel Pinto (pictured), chairman of the NCI is concerned the regulatory burden for smaller wealth managers has been exacerbated by FSCS interim levies two years running, which represents a key issue that the NCI is engaging with the regulator on.

‘The absolute figure for everyone at the NCI is high, but also the unexpected nature of the FSCS is an issue,’ he said.

He proposes that asking firms to pay more each year towards the scheme and allowing for more of a buffer for future blow-ups rather than large fluctuating one-off payments could work better.

Speaking before the FSA issued proposals to review the FSCS funding model last week, in which it sought to reduce the likelihood of interim levies and offer firms more certainty on the level of fees they pay by eliminating cross-subsidies between asset managers and deposit takers.

Meanwhile, the regulator called for revised annual thresholds based on assessments of affordability and proposed a 50% FSCS funding rise for investment advisers, while investment managers would see their liabilities fall by £70 million. 

Meanwhile, the FSCS will consider potential compensation costs expected in the 36 months following the levy instead of twelve months as is currently the case.

Pinto also expressed his concerns about the impact of rising regulatory costs for smaller businesses, particularly over the longer term.

‘I understand why this is happening. Obviously compliance requirements have dramatically increased since 2008. However, this phenomena is putting small-to-medium-size enterprises (SMEs) in the financial sector in a difficult position. Banks can still pay these fees, but for SMEs it is tough,’ he said, estimating his firm Stanhope spends about 5% of its revenues on regulation.

 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Liontrust ESG head says sustainable investment doesn't mean low return

Liontrust ESG head says sustainable investment doesn't mean low return

Peter Michaelis talks about ethical investment growth and where he sees future opportunites.

Play Are platforms the biggest barrier to wealth manager ETF take-up?

Are platforms the biggest barrier to wealth manager ETF take-up?

Citywire hosted a roundtable discussion to find out how and if wealth managers are using ETFs in their clients' portfolios and the challenges they face trading through different platforms.

Play SVM's Veitch on what's next for banks

SVM's Veitch on what's next for banks

SVM fund manager Neil Veitch is finding value in what he describes as unstable financials and talks through his favourite small caps.

Read More
Your Business: Cover Star Club

Profile: UBS' robo boss on what his tween can teach the industry

Profile: UBS' robo boss on what his tween can teach the industry

Co-head of UBS SmartWealth Shane Williams explains the simple life lessons missed by the first wave of robo pioneers

Wealth Manager on Twitter