The levy for Financial Services Compensation Scheme is to soar by over 40 per cent to deal with rising investment claims.
The FSCS says it needs to raise its management expenses levy limit from £12.5m set in March to £17.6m as the number of enquiries and claims “has exceeded all expectations”. It says compensation costs are likely to increase by around £15m.
The original provision was for the scheme to handle up to 2,400 new mortgage endowment claims during 2004/05 but it is now planning for up to 7,000.
Firms will not be invoiced for increased management costs until 2005, with the FSCS saying it does not intend to levy for compensation costs this year but this is under review.