FCA - Regulatory Fees and Levies Consultation 2015/16
Response to the consultation
We do not agree with the proposals for allocation of the pensions guidance levy. While we appreciate the basis for the assumption that deposit-takers in general will benefit from the new pensions freedom – in that funds available for withdrawal outwith the annuity system will be placed with a deposit-taker in some cases – we do not think that this rationale applies consistently across
the deposit-taking sector. Our members are generally relatively small in the deposit-taking landscape and under the CREDS sourcebook have restrictions placed upon them in relation to the level of deposits that they are able to accept from any individual depositor. For a credit union which is envisaged to contribute to this levy – those with MELs of £10 million or more – the restriction on individual shareholdings (i.e. deposits) in the credit union is 1.5% of total shares. In many cases this is likely to be well under £100,000 per depositor, strictly limiting the market for credit unions in serving those who choose to withdraw their pension pot in cash.
Furthermore, credit union services are generally limited to a simple savings and loans proposition with some limited involvement in mortgages and transactional payment services for a minority of credit unions. No credit unions are involved in providing specific investment services for individuals with large cash resources to invest. Indeed, credit unions have no legal or regulatory authority to provide such services. Therefore, in comparison with other deposit-takers credit unions are unlikely to yield the level of benefits that the proposal’s assumption suggests.
As such, we would like to suggest that credit unions, as a distinct sub-sector of the A1 fee-block, be removed from the requirement to contribute to the pensions guidance levy. There are a number of precedents for making such a concession for credit unions in light of the social value which credit unions seek to engender, particularly in relation to financial inclusion, and we therefore feel that the apparent administrative costs of making such a distinction within the fee block need not be excessive or insurmountable.
You can find the full response available to download on the right hand side.