Investment - Articles - FCA to work with PIMFA to help reduce FSCS levy

The Financial Conduct Authority (FCA) has pledged to help wealth managers and financial advisers to stabilise the Financial Services Compensation Scheme (FSCS) levy by 2025 and then work with PIMFA and the industry on reducing the levy burden on firms between 2025 and 2030.

 The announcement came as Sarah Pritchard, Executive Director, Markets at the FCA gave the closing keynote speech at PIMFA’s second virtual Senior Leadership Summit.

 It came on the same day the FSCS lowered its forecast for the levy from an initial £1bn in 2021/22 at the start of this year, to £717m for 2021/22 now.

 Ms Pritchard said the regulator was looking to stabilise the FSCS levy by 2025 as part of the FCA’s transformation policy adding that the FCA was targeting “a year-on-year reduction in the levy between 2025 and 2030”.

 She said the FCA would publish a consultation paper before the end of the year, which would set out some proposals on how the levy might be stabilised. But she said the way forward would need the industry and regulator to work together. “This needs a whole system response,” she added.

 The Senior Leadership Summit, which evolved out of PIMFA’s Annual Summit, was attended by more than 100 chief executives and senior leaders across the UK’s wealth management and financial advice profession, who met to discuss the future of the industry and the latest challenges and opportunities facing them.

 Delegates attending the Summit heard from numerous expert speakers on a broad range of subjects including a keynote opening address from Economic Secretary to the Treasury, the Rt. Hon John Glen MP, who spoke about the Government’s future plans for regulating the industry, plans to enable Defined Benefit pensions to access illiquid assets more easily and the Government’s pensions charge cap consultation. He also outlined the crucial role the financial services industry would play in the Government’s plans to transition to net zero by 2030.

 Delegates also heard from Julia Hoggett, Chief Executive Officer of the London Stock Exchange on the importance of the Kalifa Review of the UK FinTech industry and Lord Hill's UK Listings Review, and how both together represented the biggest period of change in years for UK markets and would create a positive change in the perception of the UK capital markets globally.

 Among other speakers at the Summit were Major General (Retired) Paul Nanson CB CBE, ex-Commandant of the Royal Military Academy Sandhurst and Board Member at Coaching Centred Leadership, sharing experiences over his 34 years of military service and sharing insights into the hallmarks of leadership and Charlotte Crosswell, OBE, Chair and Trustee of Open Banking and Dr Kay Swinburne, Vice Chair of Financial Services at KPMG on the future of Technology in Wealth Management.

 The Summit was also a chance for some of the industry’s senior leaders to take part in a number of interactive roundtables on topics including where the wealth management industry is heading post-Covid, the impact of sustainability on the industry, the future of leadership and the world of work and how ESG factors are changing client expectations.

 PIMFA Chief Executive, Liz Field, commented: “We welcome the announcement today from the FCA that the regulator wants to work with us to stabilise the FSCS levy and work towards real world year-on-year reductions in the levy between 2025 and 2030.

 “PIMFA remains absolutely clear that the current levels of FSCS funding are unsustainable for the industry and can only be addressed once the drivers of FSCS claims are suitably addressed.

 “For the second year in a row the Senior Leadership Summit has been an important opportunity for the industry to come together, albeit virtually, to discuss the challenges we face as well as many new opportunities in the year to come.

 “I’m grateful to all those that attended the Summit, our sponsors SEI, Medallia and Accenture and to all our expert speakers who contributed to a number of thought-provoking discussions and helped to make our second Virtual Senior Leadership Summit such a success.

 “The virtual world provides accessibility and convenience so you can look at the speeches, seminars and discussions in your own time to suit your diary and needs. However, for all its advantages, next year we very much hope that as an industry we will be back in a hybrid model and also be able to meet in person”.

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