Tenet backs FSCS product levy
Earlier in the month the Personal Finance Society called for funds to be collected from clients’ premiums on an annual basis to fund organisations like the Financial Ombudsman Service.
Adviser fees have increased by 100% over the last five years from £148m in 2010/2011 to £296m in 2014/2015, while last week the Financial Conduct Authority confirmed that adviser fees will rise again by 8.4% in the next financial year.
Tenet also called for the FSCS to create a funding pool using some of the regulatory fine income rather than feeding it all back into the treasury.
In 2014 FCA fines against financial institutions totalled £1.47bn.
Martin Greenwood, Tenet chief executive, said: “We need to significantly reduce cost pressures on the advisory sector if we want on-going access to affordable advice for consumers.
“We have a structure at present where the cost of compensation is ultimately passed down to clients of good quality advisers – the rationale being that poor quality advisers are much more likely to go out of business, not contribute to the next FSCS levy and leave their clients to call upon the FSCS for compensation.
“Tenet believes that a product levy on relevant products at the point of sale offers a much fairer, more transparent and sustainable solution.
“I doubt we would get continued access to the fine money but using it to set up an initial pool seems a reasonable demand.”