Investment - Articles - PIMFA welcomes reduction in FSCS levy


PIMFA welcomes the latest forecast of the Financial Services Compensation Scheme (FSCS) levy which shows a reduction in the levy for 2022/23 to £625mn from an original forecast of £900m in November 2021.

 But PIMFA continues to call for the Government to consider using Financial Conduct Authority (FCA) fines to subsidise the levy, at the very least as a short-term option. Doing so would be the purest way of ensuring a ‘polluter pays’ model of compensation for consumers and would mean 90% in the FSCS levy this financial year would be paid from FCA fines. We continue to believe the current model, which sees consumers suffer and well-run firms pay for the poor behaviour of others, is both unsustainable and unfair.

 PIMFA has been actively working with the FCA for some considerable time and we have been pleased to see in the past year that the FCA has accepted our argument that the FSCS levy is dysfunctional. We will continue to work with the FCA to achieve a long-term solution to the levy.

 Simon Harrington, Head of Public Affairs at PIMFA, commented: “We are pleased to see that the annual levy for the coming year has significantly decreased from what was forecast late last year. While this represents a significant reprieve for firms, we are cognisant of the fact that we will continue to see increases in the levy as harm works its way through the system.

 “We have consistently argued that the Government should give consideration to the use of FCA fines to help subsidise the levy, which would represent a 90% contribution to the levy this year and is the purest distillation of the polluter pays model. Doing so would represent a significant show of solidarity to an industry which feels not enough have been done to bring the cost of the FSCS levy under control.

 “In addition, we welcome the publication of the FSCS’s data insights. It is vital that public bodies are transparent in the way they work and the FSCS should be congratulated on its laudable efforts to do this.”
  

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