PIMFA, the trade association for the wealth management and financial advice industry, believes that the FSCS compensation forecast of GBP1 billion would be considered a ‘national scandal’ in any other industry, and that reform is urgently needed.
PIMFA, the trade association for the wealth management and financial advice industry, believes that the FSCS compensation forecast of GBP1 billion would be considered a ‘national scandal’ in any other industry, and that reform is urgently needed.
Tim Fassam, Director of Government Relations and Policy at PIMFA, says: “In any other sector, a forecast for compensation of over GBP1 billion would be the focus of national scandal – GBP1 billion of compensation represents GBP1 billion worth of financial loss, emotional stress and economic hardship for thousands of UK consumers.
“We cannot continue to normalise this level of loss, accepting that the compensation scheme will hopefully pick things up on the other side, every single person who has had to claim on the FSCS has received a poor outcome that it would be better to avoid. This is a further sign that the cost of compensation is truly out of control.
“This cost is a symptom of a system that fails both customers and the industry. Reform is now urgent but will take time. HM Treasury must find other sources of revenue to cover these extreme costs. The fairest source are FCA levies, which ensures polluters pay and it remains an industry funded regime.
“We have put forward a number of recommendations to the government and the regulator, which we think will reduce the bill over time but crucially ensure that firms do not fail in the first place. We want to work collaboratively to ensure that these continued rises in compensation claims are brought to an end.’
