Should FCA Fines Fund Compensation

Should FCA Fines Fund Compensation.

There have been further calls this week for the government to rethink its policy on Financial Conduct Authority fines and how they are distributed.

Way back in 2013, the government changes the rules so that FCA fines were redirected by government to the Treasury go to “good causes”.  Initial the fines are passed to a “consolidated fund” which is then distributed to causes such as military charities.

Do you think this is fair?

We don’t.

We are a regulated firm and we pay levies to the FCA, the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS).

It is the finance industry itself, not the government, that funds the independent complaints arbitrator (the FOS).

It is the finance industry itself, not the government, that funds the compensation scheme (FSCS) to pay compensation to consumers when regulated firms fall into default/close down either through too many compensation claims or simply poor practice.

In short, the good firms pay for the bad.

Indirectly, this also means that our fees increase, so you as a client, when dealing with a “good adviser” are paying for “bad advisers” or “bad clients” who fabricate/overstate complaints.

Why should a “good” firm that has never had a compensation complaint payment awarded by the FOS pay for the bad.  If the FCA finds “poor” practice in a regulated firm, it fines them.  Why is that compensation not paid in to the FSCS and FOS to fund complaints and compensation?

As it stands today, the “poor” practice firms make lots of profit with mis-selling etc, some get fined, some go into liquidation resulting in FSCS claims.  Yet, us, the “good” still have to foot the bill for all this.

We believe that a total rethink of how complaints and compensation schemes are funded, so that is the “bad” that pay for the “bad” and not the “good” paying for the “bad”.