The Financial Services Compensation Scheme plans to increase its workforce by about 25% by 2024/25 to cope with a surge in complex cases, the body has confirmed to Financial Planning Today.

The FSCS headcount will rise from 254 to 321 with the recruitment of 67 new staff.

The consumer safety-net plans to fund the increase by bringing a large chunk of work back in-house as its moves to a ‘new operating model’ with more senior expert case handlers. It will also increases its management expenses levy.

The FSCS said earlier this week that a rise in complex cases meant it needed more in-house experts to deal with cases that will include SIPPs, investments and pension transfers. Cases in these areas have grown considerably in the past few years.

The FSCS will increase its headcount by 67 overall with 65 related to the new operating model.

In an update to its FSCS management expenses levy, the Bank of England said: “As the FSCS moves to outsourcing fewer complex claims the new operating model is intended to transfer the headcount from outsource to insourced resulting in the observed increase.”

The FSCS said that while there was no confirmed date for the recruitment the additional costs were planned for in the 2024/25 budget. 

The Financial Services Compensation Scheme outlined plans earlier this week to expand its number of expert staff to cope with an increase in more challenging, complex cases.

Martyn Beauchamp, FSCS interim chief executive, said complex claims and enquiries now made up the "majority" of the FSCS’s workload.

The move will lead to “extra costs” in the future, he warned, although this year the lid is being kept on rising costs.

In its latest budget forecast the FSCS said it expects staff costs to rise by nearly 21% from £32.2m this year to £38.9m in 2024/25.

The FSCS has seen a rapid rise in the past 12 months in complex cases. In December alone the FSCS declared six advice and pension firms in default, with an additional two firms under investigation.

Some 40 financial advice firms hit by BSPS claims have so far failed with a further seven under investigation by the FSCS, latest FSCS data shows. 

Mr Beauchamp said: “Complex claims and enquiries now make up the majority of FSCS’s work. To ensure we’re best positioned to handle these claims, we’ve made a strategic decision to increase our in-house expertise going forward. This transition is a key focus for us and will mean additional costs during 2024/25."

The FSCS, Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are consulting with the industry on an overall 2024/25 Management Expenses Levy Limit of a higher amount of £108.1m. This includes a core budget of £103.1m and an unlevied reserve of £5m. This reserve, £5m less than proposed in January 2023, has now returned to its pre-pandemic levels, the FSCS said.

The FSCS said it would publish a levy update in the Spring.