The chief executive of the FSA has moved to reassure adviser firms the worst Keydata offenders will face further regulatory action, including being fined.
Hundreds of distributors have been up in arms at having to pay a share of the latest FSCS interim levy, including compensation costs of £93m relating to the failure of Keydata. They argue they did not recommend Keydata products and therefore should not have to pay compensation costs.
But Hector Sants pledged the FSA may take "further regulatory action in respect of individual live distributor firms" who did recommend Keydata investments.
He said he could not disclose details of any action the FSA is taking due to confidentiality restrictions.
The promise was in a letter to Informed Choice managing director Martin Bamford who wrote to the FSA, FSCS and Treasury financial secretary Mark Hoban last month to express concern about the levy.
In that letter, signed by more than 600 intermediaries, Bamford called on the authorities to find a way to make those adviser firms who sell failed investment products "more directly liable for the cost of compensation".
In Sants's response, the CEO said he recognised the issue remains of "significant concern" for adviser firms, but repeated the assertion Keydata undertook activities relating to the Investment Intermediation sub-class and so compensation costs arising as a result should be allocated to this group.
It follows an unsuccessful judicial review into the FSCS's decision to levy Keydata compensation costs on intermediaries.
Sants pledged the FSA will continue with a review of how the FSCS is funded once "structural uncertainties" arising from changes to both the domestic and European regulatory architecture are resolved.
This review will also involve a discussion of the composition of the FSCS classes and sub-classes, he said.
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