• wblogo
  • wblogo
  • wblogo

FSCS announces three supplementary levies for the year

Chris Hamblin, Editor, London, 16 January 2017

articleimage

The UK's Financial Services Compensation Scheme is going to raise supplementary levies for the year 2016-17.

The levies – on life and pensions advisors, general insurers and mortgage advisors – are to meet unforeseen compensation costs. The levy on life and pensions advisers will require contributions from firms in other sectors. The FSCS (which has taken to calling itself 'FSCS' without the definite article) will also return a surplus of funds to investment advisors. 

The supplementary levies are: £63 million for the provision of general insurance; £36 million for life and pensions intermediation; and £15 million for home finance intermediation.

The scheme is asking life and pensions intermediaries to pay their share of the additional £36 million to fund compensation for the high numbers of Self-Invested-Personal-Pension-related claims that it is continuing to receive. This is the first time that it has had to implement a cross-subsidy. The claims in question relate to advice to switch pension funds into highly risky investments. The levy of £63 million on general insurers is to compensate policyholders of the Enterprise and Gable Insurance companies. The £15 million is due largely to the failure of one particular firm that advised investors to engage in risky property investments alongside mortgage advice, with predictable results.

The additional £36 million on life and pension advisers supplements the annual levy for 2016-17 of £90 million. This will exceed the £100 million annual funding limit for that sector and will cause a cross-subsidy from other parts of the industry through the retail pool to fund the remaining £26 million.

Latest Comment and Analysis

Latest News

Award Winners

Most Read

More Stories

Latest Poll