Aug 18 – Fuel on the flames
Firms will now be receiving their final FCA invoices for the year 2018/19. By far the largest component of the costs is the fees levied by the FCA on behalf of the Financial Service Compensation Scheme (FSCS). Bill payers have got used to the huge levies raised on them under the Life and Pensions class. This applies where mortgage firms who have been successful in persuading consumers to take out appropriate life, critical illness and income protection cover have to compensate for SIPP miss-selling. This liability disappears in 2019, however another huge component has swung over the horizon.
The claims relating to Fuel Investments Limited were first charged in 2016, being compensation to people who borrowed to invest in overseas property most of which were never built. Our early discussions with FSCS indicated a limited flow of claims, however this has now escalated into a significant wave which sees firms now being hit with huge liabilities for mortgage loans. The Fuel compensation in 18/19 on these invoices can be up to four times the FCA fee.
Because the FSCS estimate undershot last year’s actual cost, firms are now being levied for that undercharge and a bigger bill for this year. What we thought was a limited set of claims is now much larger. £57m has been levied in the last 3 years, the vast majority of which was the responsibility of one firm.
We have spoken to the FCA about this as we are concerned that with good firms paying such a large amount for the failures of one firm that justice might prevail. We wanted to understand what action was being taken against those who created this very costly mess. It appears however that despite the strong words in the FCA mission paper on their Approach to Enforcement, there are no plans to proceed against any individuals. Firms may also be surprised at the amounts levied as there is little mention in FSCS communications.
This cannot be right and we will be asking the FCA to look at this again.
2 years ago / Comments Off on Aug 18 – Fuel on the flames