Bailey, who has just been re-appointed as chairman for a second term, acknowledged the FSCS levy had doubled since he joined the lifeboat scheme in 2018, and that forecasts show it will continue to rise.
But he reiterated that this did not mean no progress has been made, saying advisers and others in the industry must appreciate there is a “lag in the system”.
However, he admitted that there was no quick solution to solve the issue of the rising levy.
Bailey added: “We are facing incredibly difficult times. The progress we’ve made is undeniable, but that doesn’t mean it’s plain sailing going forward – quite the opposite.”
Advisers have seen their FSCS bill rocket in recent years due to firm failures and rising claims, both legitimate and speculative in nature, in both the pensions and investments market.
The total industry levy is expected to rocket to £1bn for 2021-22 – marking a 48 per cent rise on the previous year. Compliant advisors are expected to share the cost with one another.
Bailey said: “Financial products and services have grown ever more complex, fuelled by the opportunities brought through digitisation.
Bailey said these financial products must serve their intended purpose and increase the wealth of individuals.
Therefore, investment advice provided to savers “must be helpful” and the variety of investment opportunities available “must be welcome”, as they help people to save and invest for their future, he said.
Bailey added: “Finance and banking are valuable assets for our country. With that, we must help those who genuinely are baffled by it all to get onto a sound footing.
Adapted from an article by Amy Austin in the FT Advisor on 6th May 2021