Tuesday, 20 January 2015 11:58
Advisers to pay more due to FSCS levy increase
The Financial Services Compensation Scheme has announced a major hike in the levy advisers will have to pay for 2015/16.
Rising complaints relating to pensions, particularly Sipps, have been blamed for the increase.
The Life and Pensions Intermediation category will pay £57m next financial year compared to £34m in 2014/15. The Investment Intermediation sector will pay £125m – a rise of £13m.
The overall indicative levy is £287m, which covers compensation and management expenses, excluding the costs of the major bank failures of 2008/09.
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This compares with total levies so far in 2014/15 of £276m.
Mark Neale, chief executive of the FSCS, said: "Our first priority for the year ahead will, of course be to deal quickly, accurately and responsively with the claims we receive from consumers.
"As always, there is a significant measure of uncertainty about the nature and volume of claims, but it is already clear that the trend, which I highlighted last year, of growing claims arising from bad advice to switch pension savings into Sipps will continue.
"So far, we have compensated eligible investors for the pension losses incurred. "Many of these investors have also, however, suffered significant investment losses as a result of advice to invest in risky, non-standard assets such as overseas property developments.
"FSCS is now close to finalising its view about whether these losses too are eligible for compensation.
"If we conclude that compensation is due for such investment losses, the costs of these claims falling on Life and pension intermediaries will rise significantly above our current forecast. We shall, accordingly, update our current forecast when we publish final levy numbers in April."
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For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.
Rising complaints relating to pensions, particularly Sipps, have been blamed for the increase.
The Life and Pensions Intermediation category will pay £57m next financial year compared to £34m in 2014/15. The Investment Intermediation sector will pay £125m – a rise of £13m.
The overall indicative levy is £287m, which covers compensation and management expenses, excluding the costs of the major bank failures of 2008/09.
{desktop}{/desktop}{mobile}{/mobile}
This compares with total levies so far in 2014/15 of £276m.
Mark Neale, chief executive of the FSCS, said: "Our first priority for the year ahead will, of course be to deal quickly, accurately and responsively with the claims we receive from consumers.
"As always, there is a significant measure of uncertainty about the nature and volume of claims, but it is already clear that the trend, which I highlighted last year, of growing claims arising from bad advice to switch pension savings into Sipps will continue.
"So far, we have compensated eligible investors for the pension losses incurred. "Many of these investors have also, however, suffered significant investment losses as a result of advice to invest in risky, non-standard assets such as overseas property developments.
"FSCS is now close to finalising its view about whether these losses too are eligible for compensation.
"If we conclude that compensation is due for such investment losses, the costs of these claims falling on Life and pension intermediaries will rise significantly above our current forecast. We shall, accordingly, update our current forecast when we publish final levy numbers in April."
Get FREE daily news summaries direct to your inbox. Sign up on the homepage now.
Follow us on Twitter and get frequent news alerts @FPM_online.
Or follow Editor Kevin O'Donnell - @FPM_Kevin or staff writer James Nadal - @FPM_James.
For the latest Sipp, SSAS and retirement news visit our sister news site www.sippsprofessional.co.uk and on Twitter @SippsPro.
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