Financial advisers support product levy

INDEPENDENT financial advisers attending the annual meeting of Fimbra, their regulator, yesterday expressed support for a levy on financial products as a better way to reform investor protection than forming the proposed Personal Investment Authority.

Andrew Hummersone of Haden Welbeck & Associates in Kent said life insurance companies were already using a product levy to compensate customers who have suffered when dealing with their tied agents. He suggested life offices had already paid out pounds 60m this year.

To applause, Mr Hummersone added: 'A product levy is the only way. If policyholders want investor protection, unfortunately they have got to pay for it.'

Sir Gordon Downey, the chairman of Fimbra, said introduction of a product levy would require the co-operation of the Government and the life offices, which was not available.

Sir Kenneth Clucas, the Fimbra council member who recommended the shake-up that is intended to produce the PIA, said he had begun his review with a strong preference for a product levy but had rejected this option because of practical difficulties.

Sir Gordon said it was a 'travesty' to talk about the 'failure' of self-regulation, although there had been disasters.

Discussions about the PIA would be more fairly portrayed as co-operative than as 'a battlefield', he said.

He said Fimbra would be able further to reduce or clear its deficit of pounds 343,000 this financial year.