An interim levy of £70m will be forced on IFA firms who offer investment advice by March 31 2010 to Financial Services Compensation Scheme to cover the recent failings.
The failures of Keydata, costing £43M coupled with Pacific Continental and Square Mile which collectively will cost £27m. This is a further blow to IFAs who are also likely to be hit by an additional interim levy of £20m for claims made in respect of NDF Administration, Defined Returns and Arc Capital and Income.
Late last year Aifa announced it was taking legal advice over the FSCS’s decision to place the Keydata costs with advisers rather than providers.
The FSCS says it is currently consulting with the FSA and administrators to determine which sub-class pays but that it is likely to fall on investment advisers.
Depending on the ultimate decisions, this could trigger a break in the £100m ceiling for the investment adviser sub-class with any overflows paid by the fund management sub-class.
Theses interim levies come on top of the already promulgated £19m levy investment advisers will have to pay the FSCS for 2010/2011 and the £13.5m that life and pensions advisers will have to pay over the same period.
In ironic contrast, the investment fund management sub-class will only be required to pay £3.5m, plus any overflows from the investment adviser sub-class.
