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Compensation scheme levy falls by 10m

The Financial Services Compensation Scheme’s initial levy for 2007/08 will be 94.5m, which is 10m lower than it predicted in January.

The levies for mortgage brokers, brokers holding client money and the pensions review group will be reduced, although the main levy for most advisers remains unchanged.

Advisers not handling money will pay the predicted 42m, a 5.1m reduction, although still high due to the number of mortgage endowment complaints. Advisers in the pension review levy will see a 9m reduction from 47.5m to 38.5m.

This fall is due to additional recoveries of 2.1m which have decreased the deficit, a reduction in the overall forecast numbers of compensation payments, a decrease in management expenses and the fact a number of payments will shift beyond into 2008/09.

There will be no initial levy for mortgage brokers, as the scheme says it has funds to cover expected costs.

FSCS chief executive Loretta Minghella says: “We have refined our forecasts for claims volumes and compensation costs. This is good news for some sectors but we recognise the levy will confirm some tough news for other groups.”

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