Newly-elected Conservative MP for Cities of London and Westminster Nickie Aiken has said she will call for a “proper, fundamental review” of the FSCS levy funding after hearing from financial advisers.
Speaking exclusively to RP’s sister title Professional Adviser, Aiken said it was time for a review of the funding of the Financial Services Compensation Scheme (FSCS) levy, and that she would be writing to the relevant minister to take the next steps towards action.
Aiken was elected MP for Cities of London and Westminster in the recent general election, beating former Labour MP-turned-Liberal Democrat Chuka Umunna. Her father, now retired, is a former adviser, having worked for Sun Life before becoming an IFA.
The new MP labelled the levy system seemed “unfair”, saying she had sympathy with a more risk-based approach, whereby those recommending or advising on riskier areas paid a greater levy share.
She explained: “It could be a tiered approach. It goes back to the Financial Conduct Authority (FCA) working in partnership with the industry, rather than it being a top-down approach, which I quite often think it is.
“I think it needs to be more of a partnership approach, particularly when it comes to things like pension planning and long-term care planning – we need to encourage people to do that, and the best way to do that is by independent advice. There will be different approaches for the types of risks people want to take, and therefore it would make sense that there be a tiered approach when it comes to any form of levy.”
Levy bill prompts letter
Advisers will face higher levy bills once again this year as the lifeboat fund is set to raise its overall levy to £635m for 2020/21 with advisers set to be collectively billed £213m. This is in addition to a supplementary levy of £50m from the life distribution, pensions and investment intermediation class in 2019/20.
The levy remains a point of contention among the sector, with many arguing the current funding model is unfair, forcing the ‘good guys’ to pay the price for others going out of business.
Last week Penney Ruddy and Winter director and Chartered financial planner David Penney took to Twitter to urge fellow advisers to write to their local MPs about the FSCS levy.
As his business is based in Aiken’s constituency, Penney wrote to her last week expressing concern about how adviser firms could be expected to stump up thousands of pounds in interim levy payments at a months notice – Penney’s firm had been asked to shell out an additional £4,500. PA understands Aiken’s office has since been in touch with Penney to ask for a list of questions for HM Treasury.
PA asked Aiken if Parliament should have a greater say over the FSCS levy, as opposed to it being entirely decided by the FCA. To this, she reiterated it was time for a “proper, fundamental review” of the levy payments paid by advisers.
Aiken had a meeting with the Personal Investment Management & Financial Advice Association (PIMFA) last week and said it was clear that all advisers present felt frustrated by the levy.
She added: “They are small to medium-sized enterprises [and] employ thousands of people across the country – and we want them to continue to do so. But I really could feel the frustration that was coming across from them all, so I will be writing to the minister to call for a review of such on how we take this forward.”