Thursday, 10 May 2018 08:30

Leading Planner calls for reform of FSCS with risk-based levy

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Nicola Watts Nicola Watts

A leading Financial Planner has spoken out about the growing compensation bill for failed adviser firms which use ‘phoenixing’ (a new company name) to relaunch themselves.

Chartered Financial Planner Nicola Watts CFP, writing in the latest Financial Planning Today Magazine, said the practice of collapsed firms relaunching under new names was “top of the pile of things that get my goat.”

Ms Watts, of Jane Smith Financial Planning, insisted she had no hesitation in continuing to highlight the issue of ‘phoenixing’ and said: “Just because it’s not illegal doesn’t make it either right or ethical and it’s a practice that needs to be stopped.”

She added: “I was reminded of the importance of scrutinising the firms allowed to work in the industry in January with the announcement of the latest set of FSCS levies.

“Let me state from the outset, I don’t have an issue with the FSCS, and I don’t necessarily have an issue with having to pay something towards this scheme, which is there to protect consumers against financial loss. However, I do have two issues:

  • How the levy is calculated
  • How certain firms seem to be able to just walk away from their financial liabilities

“On both points, once again, I find myself getting riled by the fact that my firm as a financially sound, financially frugal, carefully managed firm providing relatively low risk and high quality advice to our loyal and long-standing clients gets hit by the bills left behind by those running poorly-managed businesses providing poor quality advice.”

She called for a risk-based levy, based on the likelihood of claims and an “assessment of the financial security of the business and how it might support that level of claims.”

She added “There should also be some sort of link to and improvements in PI coverage, ensuring that insurance, rather than the firm and subsequently the FSCS, cover any liabilities.

“Could improved cover reduce the likelihood of FSCS claims, and therefore reduce levies across the industry?

“Yes, insurance premiums will likely increase, but in relation to firm specific risk, rather than the blanket brush of the FSCS levy.”

You can read the full column in the latest issue of Financial Planning Today HERE.   

 

 

This issue also features:

• Inside My Business with Alan Gow of Argonaut Paraplanning who reveals plans and hopes for his company

• Planner Casebook – Paraplanner and Chartered Financial Planner Kim Sare explains why a DB transfer can sometimes be the right move for a client

• Columns from leading Financial Planner Julie Lord, PFS chief executive Keith Richards, CISI head of Financial Planning Jackie Lockie, Paraplanner Richard Allum and other key commentators

• A 5 page Special Report from James Nadal on the latest developments in Platforms

• New Investment Insider and DFM section with 200 DFMs listed plus DFM news

Plus lots more.

Our last issue was the most read ever so see what thousands of other Financial Planners, Paraplanners and Wealth Managers are reading.

 

 

 

 

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Last modified on Thursday, 10 May 2018 08:27
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