Mark Hoban has admitted there is "no perfect solution" to the funding for the Financial Services Compensation Scheme (FSCS) but insisted it is the industry which should pay for any failures.
The funding of the scheme was brought up during a meeting of the Financial Services Bill Committee this morning, although no MPs tabled any amendments to change it.
Hoban suggested the industry had not been vocal enough about any concerns about the funding of the FSCS when the existing regulatory regime was set up, under FSMA 2000.
"The last time it was reviewed, everyone was content with the mechanism of allocation," he said. "Events subsequently suggested the mechanism was not appropriate and is now being revisited."
"I don't think there is a perfect solution to this and it is better that the industry pay rather than the taxpayer," Hoban added.
His comments came in response to issues raised by shadow financial secretary Chris Leslie, who questioned the fairness of the system, pointing out that cases such as Keydata, Arch Cru and MF Global were putting significant burdens on financial advisers.
Although he was unable to come up with an alternative, he called for a "smoother application of levy charges" across different sub-classes and asked Hoban to explain the amounts a typical practitioner might have to factor into their running costs.
Hoban reminded the committee members of the ongoing review by the Financial Services Authority into the funding of the FSCS and said the structure and methodology of the levy was included in the organisation's annual reports.
Despite not presenting any alternatives, Leslie insisted it was "incumbent to show we are aware and tuned to sensitivities of the industry".
The FSCS yesterday announced a £60m intermin levy for the investment intermediation subclass, mainly attributing it to the cost of compensation related to the MF Global failure.
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