FSCS plans to levy £287m from firms in 2015/16

FSCS plans to levy £287m from firms in 2015/16

The FSCS is planning to levy £287m from firms in 2015/16, it has announced.

It expects to see an overall reduction in the volumes of new claims in 2015/16 from 28,108 in 2014/15 to 25,590.

Payment protection insurance and mortgage endowment claims are expected to go down, but the FSCS is predicting a significant rise in compensation costs from advice to transfer pension savings into self-invested personal pensions.

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Due to the fall in claims in some areas general insurance, brokers will not be due a levy next year.

According to the FSCS’s plan there were 4,958 claims relating to Sipps in 2014/15, and it is expecting 5,407 in 2015/16.

The levy for 2014/15 was £276m, meaning there will be an increase of £11m.

The FCA and the PRA have agreed that the total levy which pays for the FSCS’s running costs will be £74.4m for 2015/16.

This will be made up of management expenses of £69.1m – made up of levies from the industry – and a contingency reserve of £5.3m which can be levied at short notice to meet unforeseen expenses.

Chris Hannant, director general of Apfa, said: “It is important that the FCA, Fos and the FSCS keep a tight control of their administration costs, and that they recognise who is paying their bills.”

The £21m base cost of running the FSCS is met equally by the FCA and the PRA.

The FCA is consulting on the proposals until 16 February.

Adviser view

Hugh Banford, director of North Lanarkshire-based Aveton Gifford Associates, said: “There is just a never-ending increase in the FSCS’s overheads, and it is never going to stop.

“It is the same with the pension guidance service. We are being forced to pay its marketing bill.”

[Table for web but not print]

General insurance provision£71m£68m
Life and pensions provision£38m-
General insurance intermediation--
Life and pension intermediation£33m£57m
Investment provision--
Investment intermediation£112m£125m
Home finance intermediation£2m£3m