Investment - Articles - PIMFA welcomes lower FSCS levy forecast

PIMFA welcomes the reduction in the Financial Services Compensation Scheme (FSCS) levy forecast for next year to £717m. Although we note that it is still an increase on the previous year.

 Liz Field Chief executive of PIMFA commented: “We are encouraged that the FSCS levy forecast us lower for the coming year – albeit an increase on the previous year. 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.

 “This means, as we set out in our paper on FSCS reform, improving the standard of supervision of the sector, looking at the market distortion at play as a result of the FSCS and improving the provision of intelligence sharing and ensuring that it is acted upon.

 “To the FCA’s credit, they have acted upon a number of these recommendations over the past year, but it is clear to us that we will only truly begin to see the fruits of that labour in the medium to long term. Given the basic tension in the construct of the levy – funding of the FSCS is forward looking while claims against it are backward looking – and the likelihood for significant increases in the future, we are clear to today that the FCA and Government should consider short-term easements alongside long-term reform.

 “In the short-term, we are again calling on the Government to consider the use of FCA fines to help fund the FSCS as a gesture of goodwill to an industry which has been badly let down.

 “Longer term it is clear to us that the construction of the funding model for the FSCS needs to be reformed and we look forward to engaging on this. However, there are some fundamentals still to be actioned and resolved as outlined in our FSCS reform paper. We will continue to engage on behalf of the sector to this end.

 “We will, as always, continue to work closely with the FSCS in understanding the drivers on our sector. To that end we believe that they deserve great credit both in the increase in recoveries over the previous year, as well as obvious and concerted efforts to be more transparent with industry in understanding the provenance of these continued rises.”

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