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Home/FSCS cuts levy by £15m after Sipp-related claims costs fall...

FSCS cuts levy by £15m after Sipp-related claims costs fall

The Financial Services Compensation Scheme (FSCS) has warned of a possible supplementary levy later in the year but said its total levy for 2017/18 is £15 million less than it forecasted in January.

Today the lifeboat announced the levy for firms will be £363 million in 2017/18 which is £15 million less than it forecasted earlier in the year. This drop in the levy came following a fall in the average cost of Sipp-related claims that are now expected to be £146 million, compared to its January prediction of £163 million.

‘These are claims which arise from bad advice to move retirement savings from occupational pension schemes into a Sipp and to invest in risky or illiquid assets within the Sipp wrapper,’ Mark Neale, the FSCS chief executive said.

For life and pensions advisers the levy is staying at £100 million, however the FSCS said it is keeping this ‘under review’ and if it is required will ‘raise a supplementary levy later in the year to cover compensation costs above the £100 million limit’.

Neale said it was important that those affected contribute to the FCA’s review of FSCS funding and warned of possible changes to the levy depending on the failure of certain firms.

‘Although the indicative forecasts we published in January and our final levy numbers this year are broadly similar, firms know that our levies can be unpredictable owing to the nature of some failures and the claims they generate. We welcome the continued support of levypayers at this time,’ he said.

‘We know that many are also engaged in the ongoing FCA review of the FSCS funding model, and encourage a full debate to settle the basis of FSCS funding for the foreseeable future’