Life and pensions advisers face paying £10m more than forecast to the Financial Services Compensation Scheme, as bad self-invested personal pension advice continues to bite.
Most industry sectors will contribute less in 2016 to 2017 than FSCS forecast in January - with the exception of the life and pensions intermediaries sector.
These advisers will pay a levy of £90m, up from a forecast of £80m, to reflect a higher average cost of claims arising from advice about investments in Sipps.
In 2015 to 2016, life and pensions intermediaries paid a levy of 100m.
Investment advisers will see their levy fall £14m from the January forecast, down to £94m from £108m.
The FSCS will levy £337m in total this financial year, £26m less than forecast in its plan and budget for 2016 to 2017, published in January.
The levy in 2015 to 2016 totalled £319m.
Management expenses will fall for the second successive year. In 2016 to 2017, these will total £67.4m.
Mark Neale, chief executive of FSCS, said: “The annual levy allows us to compensate customers. That generates consumer confidence and trust in the industry.
“We look forward to the forthcoming review by the Financial Conduct Authority into how FSCS is funded, and will play our part in discussions. I encourage the industry to play a full role in the debate.”
Funding Classes | 2016/17 Final Levy £m | 2016/17 Indicative Levy £m | Variance
£m |
Deposits (SA01) | 24 | 28 | (4) |
General Insurance Provision (SB01) | 91 | 94 | (3) |
General Insurance Intermediation (SB02) | 8 | 19 | (11) |
Life & Pensions Provision (SC01) | - | - | - |
Life & Pensions Intermediation (SC02) | 90 | 80 | 10 |
Investment Provision (SD01) | 2 | 2 | - |
Investment Intermediation (SD02) | 94 | 108 | (14) |
Home Finance Intermediation (SE02) | 6 | 10 | (4) |
Base Costs | 22 | 22 | (0) |
Total | 337 | 363 | (26) |
Darren Cooke, Chartered IFA at Derbyshire-based Red Circle Financial Planning, said he and his colleagues found having to pay for the mistakes of other pension advisers “galling to say the least”.
“A large number of us who do not touch unregulated or esoteric investments in sipps, shouldn’t have to bail out those who have, and who have taken great big fat commissions and then left the industry or phoenixed away their liabilities.
“I am hopeful but not massively confident the planned overhaul of the FSCS levy system - to a risk-based one - will address this. The FCA needs to tackle phoenixing too, like it has been saying it would for three years.”
ruth.gillbe@ft.com
