Britain's markets regulator proposed overhauling funding of a compensation plan for financial services customers after some companies providing money complained that the burden wasn't fairly distributed.
Companies were today invited by the Financial Services Authority to comment on the future funding arrangement for the Financial Services Compensation Scheme, which pays out to customers of British financial services firms that can't pay claims themselves.
``We recognize that it is not possible to devise funding arrangements which will command universal support,'' FSA Managing Director David Kenmir said in an e-mailed statement today after the FSA published a discussion paper on the plan. ``We hope to design funding arrangements which apportion the cost of compensation between regulated firms as fairly as possible.''
The FSA, last year agreed to cut fees it charges regulated firms to cover claims from investors in split-capital trusts as the compensation agency said it was hard to calculate how much money will be needed. The FSA was considering raising the fees because the FSCS, which it oversees, planned to charge members to compensate investors who lost money in the collapse of so-called split-capital trusts.
Firms that weren't involved in the trusts complained they had been unfairly penalized and some companies protested the levy was unfair to many members. Trade groups that protested included the Association of Private Client Investment Managers and Stockbrokers, which represents U.K. brokers for individual investors.
The FSA said today it plans to publish draft rules in a consultation paper this autumn after studying responses to its proposals. The regulator said any new rules will likely not start before Oct. 1, 2007.
To contact the reporter on this story: Nandini Sukumar in London at firstname.lastname@example.org
To contact the editors responsible for this story: Frank Connelly on email@example.com Katherine Snyder on firstname.lastname@example.org