The Association of Mortgage Intermediaries has reacted unfavourably to the FSA’s consultation proposals for future funding of the Financial Services Compensation Scheme (FSCS).
“Today’s consultation by the FSA on new rules to govern the Financial Services Compensation Scheme marks a watershed for the intermediary community,” said Robert Sinclair, chief executive of AMI.
“If there had been any doubt left on who is accountable for what is sold, it finally evaporated today. When anyone holding an authorisation to provide advice recommends a product then not only they, but the rest of the intermediary community are on the hook both for that product and for that advice. In deciding that the product is appropriate and suitable, liability is then established. The loss of shared producer/seller liability is a fundamental shift in policy.
“For mortgage intermediaries the drop in the maximum levy within our own ‘class’ is defeated by the increase in the insurance intermediation cap. The potential to have to meet other sectors excesses also brings increased regulatory risks to already fragile firms. The current large FSCS bills show little chance of declining in the near term.”
Sinclair added: “AMI will be discussing these changes with members and providing detailed feedback on this paper. 25 October will be a critical deadline this year.”