7th April 2017

BBA response to FCA CP16/42 – Reviewing the funding of the FSCS

The BBA acknowledges the key role played by the FSCS as the UK’s statutory compensation scheme of last resort, ensuring consumers can have confidence in the financial services market.

It is important that the FSCS funding model retains the broad support of market participants and results in a fair allocation of levies, as envisaged under the primary legislation set out in FSMA.

It is clear from the consultation paper that the FCA is considering fundamental reform to the FSCS funding regime in response to the Financial Advice Market Review (FAMR) recommendations. FCA options for funding reform are primarily aimed at reducing the quantum and volatility of levies for the Investment and Life & Pensions intermediation classes. As a consequence, the review is at risk of being driven by a narrow remit which focuses unduly on improving FSCS levy outcomes for a minority of levy payers at the expense of the wider majority. Evidence for this standpoint is provided in the form of the 3 alternative funding models set out in the consultation paper.

Please read the full response below.