Investment advisers will have to pay £4m more to the Financial Services Compensation Scheme than previously forecast, as the spectre of an interim levy hangs over life and pensions advisers.
The FSCS will levy all financial firms a total of £363m for 2017-18, which includes management expenses of £69.2m
This is £15m less than the lifeboat scheme - for people who have lost money as a result of negligence in financial services - forecast in its budget in January.
But it is higher than the total for 2016-17, when the industry was levied £337m.
According to the FSCS' latest forecast figures today (12 April), the total levy against advisers on life and pensions, mortgages and investment, stands at £249m.
Investment intermediaries face paying £4m more than the FSCS forecast in January.
The levy on life and pensions advisers remains unchanged at £100m, however the FSCS's forecast of compensation costs for this group remains above this at £146m - down from its earlier forecast of £163m due to a fall in the average cost of claims related to self-invested personal pensions.
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.
Despite the drop in forecast compensation, because the expected claims against life and pensions advisers breaches the £100m limit for that class, the FSCS stated it plans to raise a supplementary levy from life and pensions advisers later in the year.
Mark Neale, chief executive of FSCS, said: "FSCS exists to help people with nowhere else to turn when financial services firms fail.
“We protect thousands of people every year and provide compensation which the industry funds. This helps to generate consumer confidence.
"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.”
The way the FSCS is funded has been attacked by many financial advisers, who say it unfairly places the burden for picking up the bill for wrongdoing on those who stay on the right side of the rules.
The Financial Conduct Authority is currently undertaking a review of how the FSCS is funded, with some in the industry calling for a product levy to pay for the scheme, and for product providers to contribute more.
Mr Neale said: “We know that many [levypayers] 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"
laura.miller@ft.com
