FSCS forecasts £69m extra levy as Sipp and transfer claims rise

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FSCS forecasts £69m extra levy as Sipp and transfer claims rise

The UK's Financial Services Compensation Scheme (FSCS) has said it is expecting to charge advisory firms an additional £69m levy as Sipp and pension transfer claims continue to increase. 

The additional levy will be shared across all classes of FSCS businesses although those in the life and pensions intermediation sub-sectors will be excepmt, having reached its £75m cap for the year to date.

Advisers in the investment intermediation class are expected to fund £10.7m of the extra £69.1m required by the FSCS. However as the class has a £7.6m surplus from this year they will only share a £3.1m levy. 

Mark Neale, CEO of the FSCS (pictured above), said: "This will, I am afraid, necessitate a supplementary levy falling on the retail pool. We shall announce the size of that supplementary levy in January."

The FSCS reported that Sipps formed 45% of all defaults this year. Sipps also made up 83% of claims. An FSCS spokesman said: "This was due to the larger claims volumes that relate to pension adviser defaults." 

 

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Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.