Daily briefing: Wednesday - Brokers FSCS bill tied up in red tape

It is now two years since the FSA launched its top-down review of the Financial Services Compensation Scheme.

However, judging from remarks by the regulator’s head of conduct policy Sheila Nicoll yesterday, it could be another two years before brokers see any significant reduction in their FSCS levy bills.

The reason for the delay, according to the FSA, is a simultaneous review being carried out by the European Commission of the twin directives governing financial services compensation schemes.

At the back of the queue

The FSA announced late last year that it cannot take forward the FSCS review until it knows the contents of the insurance guarantee and deposit guarantee scheme directives, which provide a framework for member states’ compensation arrangements.

The problem is that both directives are tangled up in negotiations at the EU.

Nicoll told the all-party insurance and financial services parliamentary group yesterday that she hoped the picture on the EU regulatory framework would be clearer before the end of the summer, enabling progress to be kickstarted on the FSCS review. The European parliament is due to debate the deposit schemes directive in July, although there is no guarantee that this will resolve the matter.

On the plus side, Nicoll said that the FSA had done a lot of the preparatory work on the review so that it could respond quickly when it had the all-clear from Brussels.

But she offered scant hope that the FSCS review would be complete by April next year, the cut-off date for determining the level of the 2012/13 levy.

Why are we waiting?

The FSA will need three months to consult on its new set of proposals and then further time to digest any feedback. As a result, she indicated, April 2012 was likely to be an optimistic target date.

The trouble for a lot of cash-strapped brokers is that they don’t have time on their side.

Further fallout from the payment protection insurance mis-selling scandal is likely to fuel an increase in the general insurance intermediary levy next year. The petition signed by 7,000 Biba members, which was presented to the House of Commons this week, shows the depth of concern about the issue in the broking community.

The fear, as all-party chair Jonathan Evans MP suggested, is that even 2013 could be pie in the sky if the Eurocrats can’t pull their fingers out soon.

Aviva heads could roll - but not just yet

John McFarlanes appointment as non-executive chairman of Aviva was confirmed today. McFarlane has solid City of London credentials, with a seat on The Royal Bank of Scotland Group board.. He is also a former non-exec director of the London Stock Exchange.

Having an individual with McFarlane’s banking track record will undoubtedly give the group extra credibility when it seeks to raise money in the City.

However, group chief executive Andrew Moss may be sleeping a little more soundly in his bed following today’s announcement.

McFarlane will only take over from current chair Lord Sharman in June next year, and any significant overhaul of the senior management is unlikely to happen until he is firmly in the hot seat.