The final Financial Services Compensation Scheme (FSCS) levy for 2020-21 has risen by £16m for advisers to £229m, according to the British compensation scheme's market update issued this morning.
In its update the "lifeboat fund" announced it would levy firms £649m in 2020-21, £14m more than was forecast in its plan and budget that was published mid-January.
It said the main reason for the change was the inclusion of an estimated £44m to cover compensation costs for London Capital & Finance investors (LCF), which was also cited as a reason why the life distribution and investment intermediation funding class, which contains advisers, had increased.
I would like to reassure our levy payers that we are working with the industry and regulators to do as much as we can to address these concerns and will keep our levy payers updated on our progress."
Where the levy increased by £16m for advisers, it decreased for other classes such as debt management, deposits, general insurance distribution and home finance intermediation, meaning the levy's total increase stood at £14m, however the class containing advisers increased overall by slightly more than that.
The FSCS noted it had reduced its forecast outlined in January for SIPP operator claims by £7m, which it said was due to a revision in the anticipated timing and cost of some recent and expected future SIPP operator failures.
FSCS chief executive Caroline Rainbird said: "The overall increase in the FSCS levy since the January forecast partly reflects the ongoing progress we are making in relation to the LCF failure. As we announced earlier this month, we have now started the process of reviewing individual LCF claims relating to misleading advice. While it is too early to say how many LCF customers will be eligible for compensation, for the purpose of the levy we have estimated an amount of £44m.
"We know that the industry has expressed concerns about the rising trends in compensation costs and increased levy amounts. I would like to reassure our levy payers that we are working with the industry and regulators to do as much as we can to address these concerns and will keep our levy payers updated on our progress."