Charles Stanley profits take 20% hit from ‘unfair’ FSCS levy

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Charles Stanley has seen a 7 per cent increase in reported profit, although chairman David Howard has highlighted the “unfairness” of the Financial Services Compensation Scheme’s impact on its earnings.

In its final results for the year ending 31 March 2013, the stockbroking and investment management group says reported profit before tax has reached £9.1m – up from the £8.5m posted one year earlier.

Writing in the chairman’s comments section, Howard criticises the “unfairness” of the FSCS, which is the UK’s statutory compensation scheme for customers of authorised financial services firms and is funded through a levy on these businesses.

Howard says: “We have no control over the size or the timing of demands, nor any say in weeding out the rogue firms who give rise to these expensive claims. In 2011-12 our bill was £1.6m, and in the latest year the figure is £1.9m. This knocks nearly 20 per cent off our reported profit.

“Collectively, across the industry, this is a huge burden for firms and ultimately therefore for the investing public. It cannot be right that failed businesses take a great bite out of the rest of us.”

Charles Stanley’s final results also show funds under management and administration increased 14.9 per cent from £15.4bn to £17.7bn while discretionary funds under management were up 28 per cent from £5bn to £6.4bn.

Presenting his outlook for the coming year, Howard adds: “The first two or three months of our financial year, from the first of April, nearly always show an uptick, before things settle back for the summer. But so far the uptick is rather stronger than one might expect.

“It is early days to build our hopes on this for a more sustained recovery, after these long years of stagnation, but there seems to be a sense of things moving forward again.”