Neale made the comments ‘in a personal capacity’ at the UK Finance’s Retail Banking Summit.
He called for consumer protection to “increase significantly”, but added that he did not think this statutory safety net should continue to cover unregulated investments.
He pointed out that investments into these unregulated assets have led to an increase in FSCS payouts in recent years. Many of these have been investments made through a pension scheme.
Responding to the comment Aegon’s pensions director Steven Cameron says: “The suggestion that unregulated investments should be taken outside the scope of the FSCS is bold, but worth considering, provided this doesn’t dilute consumer protection.”
More than 60 per cent of the £3.3bn paid out in compensation costs during Neale’s tenure was a result of mis-selling or poor advice, according to the FSCS. A significant proportion was due to “bad advice” to transfer money from occupational scheme and invest in risky and illiquid assets, usually held within a Sipp.
Cameron adds: “We’ve previously called for those advisers recommending unregulated investments to pay higher FSCS levies, effectively moving to ‘risk based levies’ so those firms undertaking riskier activities, more likely to result in FSCS claims, pay more in.
“Mark Neale’s proposal goes further. At Aegon, we don’t believe unregulated investments have a role in mainstream financial services products including drawdown.”
FSCS levies have risen sharply in recent years, placing an increasing burden on the vast majority of professional advisers, many of whom don’t generate claims.
Cameron adds: “The many advisers who have never made such recommendations are paying, both in terms of reputation and financially, for the unsuitable advice of the very few. Anything which cuts down the compensation bill without adversely affecting consumer protection should be given serious consideration.”
