The Financial Services Compensation Scheme has announced a levy of £532m for this financial year, an increase on its original forecast earlier this year amid an "uplift" in the number of claims expected against self-invested personal pension operators.
In its plan and budget for 2019/20 published in January the FSCS initially predicted it would levy £516m from the industry, with advisers in the life distribution, pensions and investment intermediation sector expected to receive a £175m bill.
But in its final levy announced today (April 30) the lifeboat fund confirmed it would levy £532m for 2019/20 instead, at an increase of £16m, and including £74.6m of management expenses.
But the final levy to be shouldered by life distribution, pensions and investment intermediaries has decreased from the £175m predicted in January's plan and budget to £153m, a saving of £22m.
The levy bill for mortgage intermediaries remains unchanged at £4m, a significant fall from the £25m paid by the sector last year.
The investment provision sector has seen the biggest increase as a result of the revised levy, with its bill growing from a predicted £95m to £133m.
The FSCS attributed the £16m rise in the industry's forecast levy and final levy to an uplift in the number of claims expected against Sipp operators and an upwards revision to the "expected continuing costs" in some historic insurances failures.
The lifeboat fund confirmed it expected the main driver of compensation costs falling on the FSCS this year to be pension claims, with the bulk of which "continuing to arise from bad advice to transfer to retirement savings out of occupational schemes and into Sipps".
Mark Neale, the outgoing chief executive of the FSCS, said: "These trends underline the importance of the greater weight which FSCS intends to give in its strategy for the 2020s to both promoting awareness of FSCS protection and to preventing the mis-selling and advice failures which underlie these costs.
"We shall need the support of our partners in the industry and in the FCA in both respects."
Mr Neale added: "Promotion and prevention are the counterparts of our continuing and undiminished commitment to be prepared for failures when they occur and to provide an excellent service to consumers who need our protection as a result of failure."
This year’s £532m figure compares with the £468m levied last year, but the FSCS attributed the higher figure to covering a 12-month period compared with the nine-month levy from July 2018 to March 2019.
The scheme confirmed a levy for 12 months for the 2018/19 period would have been £574m, £42m higher than the final levy announced today.
The rise in many of the FSCS's compensation limits from £50,000 to £85,000 is expected to add roughly £20m to compensation costs this year.