FSCS says Keydata levy will fall on investment advisers

A controversial interim levy to cover the collapses last year of Keydata and two stockbrokers will be applied to the investment intermediation sub-class despite widespread opposition, the FSCS has confirmed.

The total interim levy for 2009/10 has, however, been cut from £90m to £80m, with the amount relating to the failures of Keydata, Pacific Continental Securities and Square Mile Securities reduced from £70m to £58m.

But confirmation the levy will fall on the investment intermediation sub-class - despite, according to AIFA, Keydata presenting itself as an investment manager - will anger advisers.

Despite the overall interim levy dropping £10m, the structured product-related charge has climbed £2m to £22m.

Revised projections mean the FSCS will not need as much money as it initially anticipated before it collects the 2010/11 annual levy, resulting in the drop for this year's interim charge.

Previous estimates put the total interim levy at £90m, made up of £70m relating to the failures of Keydata and two stockbrokers and £20m from structured products.

The FSCS says the 2010/11 annual levy for the investment intermediation sub-class, meanwhile, has increased from £19m to £24m.

AIFA director general Chris Cummings says the trade association will now be "exporing other avenues" to have the decision overturned.

"This decision will further alienate those who have to pay this levy; intermediary firms," he says. "As we have consistently argued, Keydata presented itself as an investment manager and not an intermediary.

"We will now be seeking further legal advice on this issue before we consider our next steps. We continue to believe that this is a regulatory and supervisory failure."

Law firm Regulatory Legal was also among those challenging the interim levy. Earlier this month, it said it had raised enough funds to mount a judicial review into the FSCS's decision.

The FSCS has agreed on an annual levy of £148m for 2010/11, an increase of £19.5m from initial estimates.

The general insurance intermediation sub-class 2010/11 annual levy has increased from £50.5m to £61.4m. The increase offsets the need for a 2009/10 interim levy on the sub-class, the FSCS says,