Providers to part-fund advisers' FSCS costs in FSA u-turn

Providers including banks and insurance companies may be forced to part-fund compensation costs sparked by the failure of intermediaries, after the Financial Services Authority (FSA) re-drafted proposals on funding the Financial Services Compensation Scheme (FSCS).

Originally, large compensation costs arising from the failure of an intermediary business would have been mostly paid for by other intermediaries via a ‘retail pool'. The pool - triggered once a funding class compensation threshold (currently £100m for investment advisory firms) is breached - would have been funded by intermediaries and investment providers only. However, re-drafted proposals suggest all provider firms regulated by both the incoming Prudential Regulatory Authority (PRA) and the Financial Conduct Authority (FCA) should have to contribute also. The FSA said this is b...