FSCS raises further £69 levy on life and pensions advisers
The FSCS has announced that it will raise a supplementary levy of £69m in the life and pensions class due to rising SIPP and pension transfer claims.

Despite raising a levy on life and pensions advisers in April of £75m – the maximum allowable for nine months from June 2018 to March 2019 – the FSCS expects a deficit by year end of just under £70m.
The new levy for 2018/19 is £6m larger than initially forecast as the sector continues to see the highest volume of new claims.
In 2018, SIPP and other pension transfer-related failures made up 45% of all defaults declared and 83% of resulting claims received.
The FSCS expects this trend to continue next year, with a 49% increase in costs from 2017/18, before levelling off in 2019/20.
In the home finance category, lower claims volumes and average compensation amounts suggest a surplus in funding for the current year and a low chance of any supplementary levy.
Mark Neale, chief executive of the FSCS, commented: "The foreground is dominated by the continuing growth in pensions claims. Despite raising a levy on life and pensions advisers in April of £75m – the maximum allowable for nine months from June 2018 to March 2019 – we expect a deficit by year end of just under £70m. This will, I am afraid, necessitate a supplementary levy falling on the retail pool. We shall announce the size of that supplementary levy in January.
"These short-term financial implications should not, however, obscure the longer term challenge of tackling the causes of rising pension claims and so stemming future compensation costs.
"We see some common factors underlying these claims. We see consumer vulnerability as people seek to maximise their income in retirement and are persuaded to make unwise investments, usually held within a Self-Invested Personal Pension, or to trade in valuable rights in defined benefit schemes.
"We see many examples of mis-selling as both regulated, but also increasingly unregulated advisers, promote risky, illiquid investments. We see providers who fail to perform rudimentary due diligence on these investments. We see advisory businesses which are under-capitalised or underinsured for the risks they run. And we see directors and advisers involved in failure who re-invent themselves and come back for more."
Breaking news
Direct to your inbox:
More
stories
you'll love:
This week's biggest stories:
This week's biggest stories:
Buy-to-let
The Mortgage Works launches sub-3% buy-to-let rates

Tax
HMRC rule change set to impact millions of landlords and sole traders

HSBC
HSBC launches over two dozen sub-4% mortgage rates

Bank Of England
Bank of England cuts interest rates by 0.25% in three-way vote

April Mortgages
April Mortgages launches 7x loan-to-income lending

Skipton
Skipton launches Delayed Start mortgage with no repayments for three months
