The Investment Management Association has hit out at the FSA’s proposed funding model for the Financial Services Compensation Scheme.
Director of wholesale Guy Sears labelled the proposal as “wholly unacceptable” and claimed it was unreasonable for fund managers to pay for the mis-selling of products in other sectors.
He says: “Their current model absolves banks and insurance providers of any obligation to contribute to the FSCS.
“Are general insurers, life and pensions providers really to be off the hook for the mis-selling of their own sector’s products? This is absurd.”
Sears adds: “The FSA is sending the wrong message to every segment of the industry: those which have the highest complaints rates no longer have to contribute; and fund managers now have to bear the burden of every large intermediary failure.”
The asset manager trade body wants the use of a reserve policy and three-year forecasts which would provide greater certainty to firms about future levies, smooth out exceptional claims and “ensure the right person pays”.
According to the IMA, the FSA proposals will see fund managers bear 40.8 per cent of excess claims for general insurance products, and 29 per cent for life and pensions products. It claims insurance companies who manufacture the products will pay nothing.