Life and pensions advisers will pay an extra £52m towards the cost of running the Financial Services Compensation Scheme (FSCS), as the overall levy is pushed up 21 per cent to £407m.
Latest figures published today (1 May) showed the lifeboat fund will levy firms £71m more than it forecast in its budget in January for the current year and 12 per cent more than last year when the levy totaled £363m.
However, the FSCS is in the process of aligning its levy year - which currently runs from July to end of June - to the financial year starting in April for all classes but the deposit class, meaning the coming levy year will only be nine months long.
For this year their levy will be from July to the end of March.
Next year, their levy will for the financial year from April.
The levies have been adjusted accordingly and would be even greater had they been calculated on a 12-month basis.
A string of failings around defined benefit (DB) advice set off the additional cost, which includes £10m set aside to pay for claims against a group of IFAs.
One of those was Active Wealth, which advised British Steel workers, among others, to transfer their defined benefit pension schemes into self-invested personal pensions (Sipps) seemingly without carrying out tailored suitability checks.
The firm had advised as many as 300 British Steel clients, of which 64 proceeded to transfer out of the BSPS scheme, and was one of 10 firms that stopped giving transfer advice after they were identified by the regulator as key players in the debacle.
FTAdviser learned in April clients of Active Wealth were being signposted to a claims management company that would help them bring their claims to the FSCS for a fee of up to 30 per cent of the compensation.
The latest levy increase means the maximum levy of £75m will now be raised on life and pension advisers and the balance – currently forecast as £64m - will fall on other industry sectors.
This will be raised in the form of additional levies, the amount and timing of which will be confirmed during the year.
Mark Neale, chief executive of FSCS, said: "The levies announced today provide for the steady increase in claims and compensation costs related to retirement saving.
"Risks rise as people make increasingly complex choices about the investment of their pension pots, even where investors take the sensible step of taking independent professional advice."
The levy on the investment provision class is also up £18m, which arose almost entirely from claims against Sipp operators, the FSCS said.
Home finance intermediaries will see their levy increase £5m to £22m but investment intermediaries will see a decrease of £4m (to £42m) on January's projections, mainly because of recoveries, which offset an increase in compensation payments for claims expected against Beaufort Securities.
The levy update comes in the wake of the FCA's reform of FSCS funding out this morning, which will see several funding classes merged and providers to be contributing about 25 per cent of the cost on intermediaries.