BUILDING societies have attacked plans by the Financial Services Authority (FSA) to force them to help foot the bill for customer compensation if other financial organisations go bust.
In its original review into the future funding of the Financial Services Compensation Scheme, the City regulator had proposed that a “retail pool” should be created, funded by intermediaries and investment providers to cover the collapse of companies such as insurance brokers.
However, the FSA has now launched a month-long consultation into its new plans for all providers – including banks, insurers and home finance providers – to make contributions when the pool is triggered by the failure of an intermediary.
Adrian Coles, director-general of the Building Societies Association, described the change of tack as “very disappointing” and said the trade body opposed the new proposals from the FSA, which will be replaced in April by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA).
He added: “Introduction of such a measure could cost the mutual sector many millions of pounds, money that would no longer be available for the benefit of members.”
The Association of British Insurers said: “We generally welcomed last summer’s proposals by the FSA for a new levy basis to be applied for the new PRA and FCA, but the current proposals are an unhelpful step backwards.”
Sheila Nicoll, FSA director of conduct policy, said: “Finding consensus on this subject is always going to be a challenge but we remain committed to finding a workable solution that firms can afford and live with.”
Meanwhile, the FSA confirmed yesterday that it has held talks with the British Bankers’ Association about the possible introduction of a deadline for customers to lodge complaints over the mis-selling of payment protection insurance.
The watchdog said the banking industry would have to pay for a “sufficiently widespread” advertising campaign to make sure people were aware of the issue and how to complain.
However, it stressed that no changes to rules would happen without full public consultation.
