AJ Bell asked almost 700 advisers whether the FSCS levy should be reformed so those who transact the riskiest business bear the heaviest burden in funding the lifeboat scheme.
More than three quarters (78%) supported the proposal, while just 22% did not back the idea.
The Financial Advice Market Review called for the current FCA review of how the FSCS is funded to explore risk-based levies. AJ Bell believes the review should also consider redirecting a proportion of the fines levied by the FCA to lower the overall cost of the FSCS levy. Currently all fines are paid directly to the Treasury.
Mike Morrison, head of platform technical at AJ Bell says: “Advisers are sending a message loud and clear to the regulator that the status quo, which often sees advisers with no complaints history whatsoever saddled with disproportionately huge FSCS levies, is no longer acceptable.
“Advisers have resoundingly backed the idea of a new levy model based on the risks of each individual advice firm. Moving to a ‘polluter pays’ system clearly has merits and we hope the FCA considers the views of those it regulates when deciding how to ensure the FSCS levy is fair and proportionate.
“In addition, it seems incongruous that all the fines paid by firms who are judged to have caused consumer detriment are funnelled out of the industry. We’d like to see a proportion of those fines used to reduce the FSCS levy and reduce the cost of regulation for advisers. This is one of the main barriers that gets in the way of a greater proportion of consumers having access to financial advice.”
The FCA is currently reviewing how the FSCS is paid for. Under existing rules, the FSCS levy is allocated based on the ‘fee blocks’ each firm belongs to, which are in turn determined by the type of activity that firm carries out (e.g. Life and Pensions intermediation).
Each business contributes proportionally, although these contributions are not currently linked to the risk of the business they transact.