Floodgates open as advisers inundate MPs with FSCS levy letters

Professional Adviser understands many advisers have expressed interest in sending a letter to their local MP about the levy, while tens have already done so.

Advisers will face higher levy bills once again this year as the lifeboat fund is set to raise its overall levy to £635m for 2020/21 with advisers set to be collectively billed £213m. This is in addition to a supplementary levy of £50m from the life distribution, pensions and investment intermediation class in 2019/20.

The levy remains a point of contention among the sector, with many arguing the current funding model is unfair, forcing the ‘good guys' to pay the price for others going out of business. 

Last month, Penney Ruddy and Winter director and Chartered financial planner David Penney wrote to MP Nickie Aiken, the MP for Cities of London and Westminster, the constituency in which his business is based. Aiken later told PA it was time for a review of the funding of the FSCS levy and that she would be writing to the relevant minister to take the next steps towards action.

At the time, Penney took to Twitter to urge fellow advisers to write to their local MPs about the FSCS levy. Since then, he said he had emailed the letter template to 39 advisers who said they had the intention of writing to their MP, with some intending to send the letter to multiple MPs and some intending to circulate the template around their business.

"I'm waiting for people to come back and see what the Treasury will say… I haven't seen a response just yet. It definitely seems there is a consensus that the current system is wrong, there also seems to be some consensus about a risk-based levy being the answer.

"The idea the highest risk firms are paying the least and the lowest risk firms are paying the most, that's wrong, and there has to be a solution to that," said Penney. 

Adviser action

On 16 January, Cranleigh-based Martin Bamford, who is director of client education and a Chartered financial planner at adviser firm Informed Choice and CEO of media company Bamford Media, wrote to his local MP Angela Richardson, pointing out a higher levy damages the bottom line of medium-sized firms like his, which help to fuel the local economy by providing employment to local people.

He told PA: "I led a petition to reform the levy back in 2011, which attracted 678 adviser signatures and then another in 2012 with 1,426 signatures. But neither achieved anything in terms of reforms, only platitudes from the Financial Conduct Authority (FCA) and Treasury.

"I'm hoping now there is a greater appetite to reform financial services regulation, including the FSCS levy, given how critical the government has been on the FCA in recent years. A change in FCA CEO could also open the door to some reform."  

Derbyshire-based Red Circle Financial Planning Chartered financial planner Darren Cooke has also written to his newly elected MP Mark Fletcher.

Cooke urged other advisers to write to their MPs, pointing out it should not just be those who are directors of directly authorised businesses getting involved, but members of networks too, who would be likely be asked to increase their fees as a result of the increased levy.

"They've got to sit up and take notice as well - it's their clients that are paying for this," he said, adding between FCA fees, the FSCS levy and professional indemnity premiums (PII), his cost per client relationship now stood at around £175.   

PFS template

Alongside individual advisers sending letters, the Personal Finance Society (PFS) told PA it was putting together a template letter for its members to address the issue of the levy funding.

Chief executive Keith Richards said: "Hundreds of members have been talking to us and sending evidence about the problems they face because of uncertainty over PII and increases to the FSCS levy. They have deep concerns about paying compensation for products that exist outside the regulatory perimeter through the FSCS.

"To move concerns into constructive debate, the PFS developed a potential solution to these problems that would deliver a sustainable and fairer financial education and compensation strategy, improve consumer confidence to engage in their financial wellbeing while reducing uncertainty for advisers and increase access to advice."

Richards said the body was not producing "a generic communication for a letter-writing campaign", which he said had little impact and just created paperwork for MPs. 

"We are encouraging advisers to tell MPs and other policymakers about what is happening in their community in their own words, and giving them the option of referencing the Personal Finance Society's proposed solution in a clear and accurate way which HM Treasury already has a copy of," he continued.

"There is a need for us all to do something, whether as individuals, companies or associations - it is time for a united approach to the issue to force our elected government to take action."

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