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Tenet lobbies for product tax to fund FSA and FSCS
by Jun Merrett on Aug 06, 2012 at 15:53
IFA network Tenet has called for a tax on financial products and investments as a means of funding the Financial Services Authority (FSA) and the Financial Services Compensation Scheme (FSCS).
Keith Richards, (pictured), Tenet group distribution and development director, has proposed that the FSA and FSCS could be part funded by a premium charged on products and investments and said this would result in fairer and more transparent outcomes than advisers factoring increases into their fees.
Richards said the premium would mean charging a percentage of investment or product contribution, similar to insurance premium tax on general insurance products.
The proposal is part of Tenet and Richards’ ongoing campaign to lobby MPs, aimed at highlighting the cost and potentially detrimental impact of financial regulation.
Richards said the impact of increasing costs on the adviser population could reach a 'crisis point' but that the product premium could be introduced as a short term measure.
Richards said: 'As an interim solution, we suggest consumers should pay a relative premium which is transparent and would apply to everyone, irrespective of distribution route. In a transparent and unbundled world, the consumer should understand the true cost of regulation and the price of the FSCS, which is a form of additional insurance to protect them that would otherwise continue to be fully factored into an adviser’s charging structure.'
'How the FSCS is funded is part of the wider issue regarding the overall cost of regulation and the impact it is having on the entire financial services sector and consumers alike.
'Costs seem set to continue increasing but, in a reducing industry, the impact on small and large firms is becoming untenable.’
Richards said the proceeds of the tax would be collected and allocated by the government to cover regulation costs, a compensation scheme and consumer financial education initiatives.
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