News Details

20 Mar, 2007

FSCS Funding Review

The FSA has published proposals to alter the funding arrangements for the Financial Services Compensation Scheme from April 2009.

The plans include:

dividing the market into five classes :

  • LIfe & Pensions
  • General Insurance
  • Investments
  • Deposits
  • Home Finance

Each class would then be subdivided between provision (Product Providers) and Intermediation (Brokers / Direct distribution)

The model will introduce a 'widening circle' model of funding under which the first tranche of compensation costs emerging from a particular sub-class of firms is borne by that sub-class alone, while higher costs are shared more widely.

expanding the overall financial capacity of the scheme - up to a maximum of £4.4 billion per annum

For IFA's the basis of the funding arrangements will move from the number of Approved Persons (Advisers) to annual eligible income.

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