Some Sharecast news throws a bit more light onto the FSCS interim levy that I referred to in a previous post (IG Group: FSCS sticks the boot in!) and its potential impact to IG. The item suggests that IG did have £1m provisioned but will have had little or no visibility of the levy (chalk one to the regulatory bodies then).
Seems a bit short-sighted that to protect retail investors against potential future business failures you can issue surprise invoices with 30 days payment terms.
I would have expected some kind of prior consultation as to the direction in which the FSCS strategy and modelling was going but apparently not.
Alternatively some form of stress test on a company's ability to pay within 30 days, or even a contributory plan, seems essential unless the FSCS has some prescient knowledge of a company that is going to fail in 31 days time!
Digging a little further on Keydata, it seems that the company failed over 2 years ago and many put the blame firmly on the door of the FSA for inadequately policing the situation. Even more confusing was the FSCS decision "not" to compensate Keydata investors??? (as seen in dailymail.co.uk: Payout bombshell for Keydata victims).
Taking some learning from the Keydata situation, and the lack of policing, shouldn't there also be some form of stress testing or minimum capital reserves for any company in the financial services sector (wasn't this the straw that finally brought about the credit crunch?). And, wouldn't it be ironic if the surprise levy amount and/or payment terms ultimately resulted in the failure of a business.
Seems to me that the regulatory bodies themselves need a bit of regulating or training in communication and planning!
Back to the Sharecast release: IG Group latest to receive FSA compensation bill, there is no question that IG has the resources to make the payment but, the writer suggests that the "unforeseen" nature of the regulatory expense will probably put paid to rumours of a special dividend and may result in a slightly more conservative management of working capital and capital investment.
This combination of factors has resulted in some analysts at Panmure Gordon paring back profit forecasts for 2011 to £166.4m, -£4.4m (-2%).
Frustrating for an investor though. Having seen the aftermath of the lack of regulation there is an obvious need for more protection (and this levy is part of the savings compensation scheme) but it doesn't seem that there is much of a coherent plan or that it will rein in banking pay and bonuses!
Seems a bit short-sighted that to protect retail investors against potential future business failures you can issue surprise invoices with 30 days payment terms.
I would have expected some kind of prior consultation as to the direction in which the FSCS strategy and modelling was going but apparently not.
Alternatively some form of stress test on a company's ability to pay within 30 days, or even a contributory plan, seems essential unless the FSCS has some prescient knowledge of a company that is going to fail in 31 days time!
Digging a little further on Keydata, it seems that the company failed over 2 years ago and many put the blame firmly on the door of the FSA for inadequately policing the situation. Even more confusing was the FSCS decision "not" to compensate Keydata investors??? (as seen in dailymail.co.uk: Payout bombshell for Keydata victims).
Taking some learning from the Keydata situation, and the lack of policing, shouldn't there also be some form of stress testing or minimum capital reserves for any company in the financial services sector (wasn't this the straw that finally brought about the credit crunch?). And, wouldn't it be ironic if the surprise levy amount and/or payment terms ultimately resulted in the failure of a business.
Seems to me that the regulatory bodies themselves need a bit of regulating or training in communication and planning!
Back to the Sharecast release: IG Group latest to receive FSA compensation bill, there is no question that IG has the resources to make the payment but, the writer suggests that the "unforeseen" nature of the regulatory expense will probably put paid to rumours of a special dividend and may result in a slightly more conservative management of working capital and capital investment.
This combination of factors has resulted in some analysts at Panmure Gordon paring back profit forecasts for 2011 to £166.4m, -£4.4m (-2%).
Frustrating for an investor though. Having seen the aftermath of the lack of regulation there is an obvious need for more protection (and this levy is part of the savings compensation scheme) but it doesn't seem that there is much of a coherent plan or that it will rein in banking pay and bonuses!
Post Title
→IG: Update to FSCS Post.
Post URL
→https://national-grid-news.blogspot.com/2011/01/ig-update-to-fscs-post.html
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