MP Jonathan Evans condemns ‘indefinite delay’ as ‘unacceptable’
The long-awaited review of the Financial Services Compensation Scheme (FSCS) is subject to indefinite delay, FSA chief executive Hector Sants has admitted, fuelling fears of a further sharp increase in the levy next year.
Responding to questions after his Insurance Institute of London lecture at Lloyd’s last week, Sants said the FSA was waiting for the government’s wider review of the scheme to conclude before restarting its own work on the levy, set to rise to £93.5m next year.
The FSCS was included last year in the government’s overhaul of City regulation, which is not expected to conclude for two years.
Sants said: “We should continue the review of the FSCS funding model, but only when we know what the structure of the FSCS will be. Maybe we will not know that until later down the line.”
Unless the levy is reformed, brokers will be liable to pay an even higher sum in 2012/13, owing to the increasing number of complaints about mis-sold payment protection insurance (PPI).
The Financial Ombudsman Service received 49,196 PPI-related complaints in 2009/10, compared with 59,975 in just the first nine months of 2010/11, according to figures issued last week.
Chair of the all-party parliamentary group on insurance and financial services Jonathan Evans MP slammed the FSA over the delay. “I am very disappointed. We all recognise that the restructuring of the FSA produces challenges, but these are challenges that must be addressed within a reasonable timetable. An indefinite delay in addressing this important issue is unacceptable.”
Evans’ predecessor and Institute of Insurance Brokers president John Greenway said: “The timetable for the government review is too long for this issue to be hitched in tandem with it.”
Biba chief executive Eric Galbraith called on the FSA to accelerate its review of the levy. “I am concerned that its recent comments have shown that the FSCS issue is not as high priority for the FSA as it is for us and our members,” he said.
“It is imperative that the FSA now pushes forward with its consultation process to ensure that a more equitable model is in place for April 2012.”