Mortgage heavyweights call for FSCS fee reform
Under the existing FSCS fee structure life and critical illness cover falls into the life and pensions business category thereby forcing any broker advising on life assurance or CIC to pay a proportion of FSCS levies incurred by every pensions adviser.
In its 2015/16 budget published at the start of this year, the FSCS said it expected a reduction in the overall volume of new claims as the number of claims for PPI and mortgage endowments were expected to fall in line with those experienced by the Financial Ombudsman Service and the wider industry.
However, it anticipated the scheme would see a significant rise in compensation costs arising from advice to transfer pension savings into self-invested personal pensions.
Stockton, financial services director at Countrywide, said the successful implementation of the Mortgage Market Review had proven mortgage intermediaries had stepped up quality and reduced risk in the sector and fees should reflect that.
He said: “MMR has been a success and that is a positive reflection on all parties. Maybe as a result of these changes our fees will be reduced and the Financial Services Compensation Scheme reorganised to properly reflect the risks that each area incurs?”
His call was echoed by Bunton, director of London & Country, who said the current FSCS fee structure was “utterly unfair”.
He added: “I have always argued consumers’ corner. From the very earliest days of L&C back in the early 1990s right through to today we have championed consumers’ cause and fought hard for them to be treated fairly.
“It therefore saddens me that whilst we are continually championing fairness towards the UK’s mortgage borrowers, this is not always reciprocated in the way in which advisory firms are being treated themselves.
“I say this because it is utterly unfair that good firms serving customers’ needs are facing ever-increasing bills to pay for miscreants who have left the market and left their past miss-selling liabilities with FSCS.”
Bunton called it “a case of the good picking up the tab for the bad” after the 2015/16 the FSCS levy on the investment category trebled from the previous year to £100m.
Bunton added: “FSCS say that this increase is largely due to a rise in claims for miss-sold SIPPs and that the extra fees will fund the redress for these, but why oh why are mortgage and GI intermediaries having to foot this particular bill?
“It would be very difficult to find any fair minded person to put forward the current system as fair on good firms and it is about time that these firms are treated fairly. The good cannot be continually expected to pick up the tab for the bad, especially not in areas where they don’t even conduct business themselves.”