No product levy
Richards added: “While it is disappointing that the FCA has effectively ruled out the possibility of introducing a product levy, it has acknowledged that there are other ways it could more clearly link product risk to FSCS charges.
“The concept of a risk-based levy, where firms could be eligible for a discount if their behaviour reduced risk, has merit and is certainly worth considering in more detail.”
Proposals
The FCA is consulting on a number of options for changing the funding of the FSCS and the coverage it provides. The regulator is:
- asking for feedback on the professional indemnity insurance (PII) market and the coverage that it provides – the FCA is considering proposals to make PII more effective through the introduction of mandatory terms;
- introducing product provider contributions towards intermediation claims;
- changing the FSCS funding classes for intermediation activities;
- updating limits on consumer coverage in light of the pension freedoms; and
- exploring the potential for FSCS levies to better reflect the risks posed by particular practices.
The FCA consultation is open until 31 March 2017, with a further consultation paper on proposed rule changes expected in autumn 2017.
Under current FCA rules, FSCS contributions are required from firms involved in intermediating general insurance, life insurance, home finance or providing or intermediating investments, and may be required from firms providing insurance or that accept deposits.
