INVESTMENT firm Charles Stanley yesterday hit out at the expensive compensation structure of the financial services industry for eating into annual profits.
The company, which has been a member of the London Stock Exchange for more than 160 years, said the “unfairness” of the Financial Services Compensation Scheme (FSCS) levy had cost it £300,000 more this year at £1.9m, wiping 20 per cent off its reported profits.
“Collectively, across the industry, this is a huge burden for firms and ultimately therefore for the investing public,” chairman Sir David Howard said in a statement to investors. “It cannot be right that failed businesses take a great bite out of the rest of us.”
The FSCS is used to pay compensation to customers of financial services companies who fall over and cannot pay up what they owe. It is funded by a levy on nearly all financial firms.
The complaint came as the company, which started in 1792, posted better than expected annual numbers for the year ending March, increasing revenues and profit.
Full year revenues ticked up nearly seven per cent, led higher by surging fee income from its funds. Pre-tax profits increased seven per cent to £9.1m.
Broker Canaccord Genuity upped its outlook for the company on the back of the results, predicting its shares would be worth 450p each in a year’s time. The business closed up over two per cent at 397p last night.