FSCS raises £50m supplementary levy on life and pension advisers

This is a slight update on the £46m levy proposed in December.

The FSCS says the levy has arisen due to continued growth in the volume of pension transfer and SIPP-related pension advice claims, as well as more complex and expensive investment advice claims. There have also been two new stockbroker failures, namely SVS Securities and Reyker Securities.

In a letter sent to firms, Caroline Rainbird, chief executive of the FSCS, said: "We appreciate that the supplementary levy will not be welcome news for firms, but we only raise a supplementary levy where we have reasonable grounds for believing that the funds available to us to meet relevant compensation costs or management expenses for the period until the next levy is due are, or will be, insufficient.

"FSCS has a duty to pay compensation claims as they fall due and that helps to promote consumer confidence."

Last week, the FSCS announced that its management levy will increase by 4.8% in 2020/21 to £78.2m.

The document says that 75% of the increase can be attributed to a forecast rise in the volume and complexity of claims expected by the FSCS.

The FSCS has budgeted £5.1m to process particularly complex claims over 2020/21 but says it may also need to use £2.6m of its £5m contingency reserve due to an unexpected increase in the number of claims it will need to handle this year.