Advisers face extra £24m FSCS levy demand due to SIPP claims

Advisers look set to pay almost £24m more than expected to the Financial Services Compensation Scheme (FSCS) due to more claims about self-invested personal pensions (SIPP).

In an update released this morning, the body said “the supplementary levy arises from continuing growth in volume of SIPP-related claims falling on life and pension advisers”.

In April, it forecast these would total £146m but because of uncertainly it only raised a levy of £100m (the maximum for the sector).

However, latest calculations based on current volumes and average costs, showed the body needed to raise an additional £24m in 2017/18.

It said the cost would trigger a cross-subsidy and “fall on the retail pool”.

The FSCS said that overall the expected compensation costs for the year have actually fallen as average payouts had dropped from £30,000 in January last year to £23,000 today.

But the reduction in average costs, it said, had been partially offset by a 4% increase in the number of claims processed in the overall class compared to the forecast. It added the overall uphold rate had gone up from 61% to 66%.