Advisers say they are not being given enough time to plan for additional Financial Services Compensation Scheme levies.
The FSCS handed investment advisers a refund of £50m this week while warning an additional £36m will be levied on life and pensions advisers because of an ongoing influx of Sipp-related claims.
The annual levy on life and pensions advisers for 2016/17 was already set at £90m. This means that of the additional £36m, only £10m will be paid by that group and the remaining £26m will be shared across the other funding classes because breaking the £100m annual limit triggers a cross-subsidy.
Aspect8 financial planner Claire Walsh says the way the levies are announced makes it difficult for advisers to plan. She says: “There is not much forewarning in terms of a timeframe of when they happen. It feels like it is completely out of our hands in terms of how it will impact and how much it will cost.”
In its 2017/18 plan and budget released this week, the FSCS also warned providers they may have to meet the cost of future claims where they have accepted Sipp business from unauthorised introducers.
Page Russell director Tim Page says: “It will hasten a trend towards plain vanilla Sipps on one end of the spectrum and very expensive, niche full Sipps at the other.”
Read FSCS chief executive Mark Neale’s blog on the new plan and budget here.