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Peter Hargreaves: FSCS Levy could put firms out of business
Markets
by Matthew Goodburn on Feb 10, 2011 at 10:08
Hargreaves Lansdown co founder and executive director Peter Hargreaves has attacked the Financial Services Compensation Scheme (FSCS) levy describing it as 'fundamentally wrong'.
Hargreaves was speaking to Citywire after the firm's six month results to the end of December, which revealed it had been asked to pay a £3 million levy into the scheme to compensate for the collapse of Keydata and other intermediaries.
Hargreaves' anger is centered around the fact the firm has never recommended retail structured products to its clients and has been very vocal over its concerns over their transparency, both in public and to the FSA.
He told Citywire: ''If [the government] are going to regulate the industry, and the regulator falls down on the job, the government should pay for it. They cannot expect us to pay for both the regulation and the mistakes, that is fundamentally wrong.'
'For a decade we have been very anti structured products. We have never recommended them, never promoted them, have gone public on that and have always told the FSA we were not happy with them. If [Keydata] is a product provider we should not be paying for it.'
Hargreaves was even more scathing on the FSCS itself, saying they were not concerned because the money they received was not theirs.
'The money received by the FSCS has always been misused. The people that dole it out don't give a damn because it is not their money.'
Hargreaves warned that the level of the FSCS bills being meted out to investment firms could push some of them out of business.
'We think this could push a few firms out of business.'
Hargreaves said the firm was also looking to build its market share in stockbroking to close the gap on market leaders TD Waterhouse and Barclays.
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5 comments so far. Why not have your say?
Brian De Vecchis
Feb 10, 2011 at 10:44
Quite right, Peter. Looks to me like another FIMBRA type disaster waiting to happen.
report thisaidan vaughan
Feb 10, 2011 at 11:18
Like Peter Hargreaves we have an aversion to structured products, and in the down turn structured products appeared to be have still been enthusiatically sold by bankassurers; nonetheless the very decerning may make a bob or two in the secondary market.
The bigger stories- Who is culpable for other people's mistakes? Will RDR really put the wide boys- amongst product manufacturers as well- out of business? What were the PI insurers doing? Is the whole UK regulatory system fundamentally flawed?
Then, who is large enough to survive all these shocks? Certainly HL have a first class business and economies of scale. Us boutique wealth / discretionary managers not only need to have robust business models but economies of scale but preserve the personal skills and bespoke nature of our service.
Needless to say, we would welcome a conversation with any smaller London based IFAs pondering over their future!
Aidan Vaughan
MPL Wealth Management Ltd
report thisStephen W Roach FCSI
Feb 10, 2011 at 12:12
Well articulated Peter Hargreaves.
Likewise, we would welcome a converstaion with any other West Country based IFAs or Firms pondering over their future.
report thisGreg Miles
Feb 10, 2011 at 15:58
''If [the government] are going to regulate the industry, and the regulator falls down on the job, the government should pay for it. They cannot expect us to pay for both the regulation and the mistakes, that is fundamentally wrong.'
Absolutely right. Where is the logic in getting good firms (and their customers) to pay for the failings of the regulator.
report thisChris Marsden
Feb 10, 2011 at 18:16
Some companies like gambling with other people money. Heads they win, tails we lose and bail them out or compensate their customers.
Well run companies like HL don't take such risks, so they, and their customers should not have to bail the gamblers out WHEN they get in deep pooh.
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