APFA: New FSCS compensation scheme 'distorted'

Carmen Reichman
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The Association of Professional Financial Advisers (APFA) has today warned that the proposed new way of calculating compensation costs by the Financial Services Compensation Scheme (FSCS) could make levies more volatile and leave firms out of pocket.

APFA said it supported the scheme's proposed new way of calculating costs in principle but queried its approach to 'exceptional factors'. Under the proposals, which the FSCS published in a policy update yesterday, the scheme would base its fees calculation on the average of the proceeding three years' expected compensation costs - or one year's, whichever is the greater. The scheme argued this way of calculating fees would allow it to "reduce the volatility of annual levies, reduce the likelihood of interim levies, and give the industry greater certainty." However, APFA said its ap...

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