The UK’s Financial Services Compensation Scheme (FSCS) has announced it will levy financial services companies £407m in the current financial year, an increase of 21%, or £7m, on the previous year, in order to cover the costs of a raft of pension claims that are on the horizon.
The FSCS said that advisers specializing in life insurance and pensions would bear most of the increased burden, paying a total of £64m, or £52m more than the total bill mooted at the start of the year.
The increased fees will, according to the FSCS support the national bankruptcy compensation scheme from 2018 to 2019. The FSCS said there will be a higher levy to pay claims against operators of Self-Invested Personal Pensions or SIPPs.
The increased budget will also help cover those claims anticipated against Beaufort Securities, an insolvent UK broker, the FSCS said yesterday.
“The levies announced today provide for the steady increase in claims and compensation costs related to retirement saving,” explained Mark Neale, chief executive of the FSCS. “Many claims reflect bad advice to transfer pension savings from occupational schemes into Self-Invested Personal Pensions, usually with a view to invest in illiquid and risky unregulated products.”