The cost of the Investor Compensation Scheme is funded by:

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Prepare for the Qualified Financial Adviser (QFA) Exam 1 with flashcards and multiple choice questions with helpful hints and explanations. Gear up for success!

Multiple Choice

The cost of the Investor Compensation Scheme is funded by:

Explanation:
The cost of the Investor Compensation Scheme is covered by levies imposed on the firms that are within the scheme. This means the industry funds the protection system, rather than taxpayers or the regulator. The fund is built up from contributions by member firms, typically based on their level of activity or risk, so it remains available to compensate eligible investors if a covered firm fails. While regulators and EU bodies oversee the framework, they do not directly fund the scheme.

The cost of the Investor Compensation Scheme is covered by levies imposed on the firms that are within the scheme. This means the industry funds the protection system, rather than taxpayers or the regulator. The fund is built up from contributions by member firms, typically based on their level of activity or risk, so it remains available to compensate eligible investors if a covered firm fails. While regulators and EU bodies oversee the framework, they do not directly fund the scheme.

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