* FCA wants scheme levies to better reflect risks
* FCA says scheme must not be "first line of defence"
* FCA wants to widen scope of scheme in asset management
* FCA wants to include Lloyd's of London in retail scheme
By Huw Jones
LONDON, Dec 14 Firms offering riskier products
should pay higher levies to a fund used to compensate consumers
of pensions, credit and investment funds, Britain's financial
watchdog said in proposals published on Wednesday.
The Financial Conduct Authority said it was reviewing how
the Financial Services Compensation Scheme (FSCS) is financed
after a sharp rise in levies for some firms.
The scheme paid consumers 271 million pounds in compensation
in the year to March, and received more than 46,000 new claims.
The FCA wants to widen the scope of levies, forcing firms to
do more to compensate customers so that the scheme is "not the
first line of defence when a firm fails".
It will review the professional indemnity insurance market
in the first half of 2017 to see if this insurance could be used
to cover more of the claims and wants to begin collecting extra
data from firms before deciding whether to set levies based on
risks posed by firms and individual products.
These two initiatives would enable the FCA to move towards a
"polluter pays" approach, meaning those who pose greatest risks
contribute the highest levies.
For the first time, the FCA has proposed that firms that
provide products to intermediaries should make contributions
when those intermediaries fail.
Britain has made sweeping changes to its pensions market,
allowing older people to cash in their pension pots to invest in
The watchdog is looking at whether to increase the 50,000
pound limit on claims relating to sales of life, pension and
investment products in light of these pension freedoms.
It also wants to extend the scheme's coverage for some
aspects of fund management, and introducing it for debt
The FCA also proposes that the Lloyd's of London insurance
markets contributes to the scheme's retail pool.
New rules on extending the scope of the scheme to debt
management and other areas would come into effect in the 2018-19
Final rules on professional indemnity insurance and
compensation limits would be made in the first half of 2018,
with the new funding structure in place for the 2019-20
(Editing by Alexander Smith)