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DB transfers drive FSCS levies up again

Pension savings-2015Advice firms behind the British Steel pension saga have contributed to driving Financial Services Compensation Scheme bills upwards for the coming year.

In a note this morning, the FSCS says it is having to levy £71m more than it forecast for 2018/19, including an extra £52m on life and pensions advisers.

The lifeboat fund says the main reason it has had to hike fees is due to impending claims over defined benefit pension transfers, often ending up in “illiquid and risky unregulated products”.

A pot of £10m has been put aside over IFAs including Active Wealth, one of the firms at the centre of claims over misselling Sipps to British Steel workers.

However, since levies on life and pensions advisers are capped at £75m, the surplus £64m needed will be paid by other parts of the industry.

Compensation over Sipp operators themselves is also putting pressure on the scheme. An additional £18m bill for investment providers has arisen “almost entirely” from claims against Sipp operators, the FSCS notes.

Investment advisers, however, will see a £4m decrease in planned levies as the FSCS continues to make recoveries from collapsed firms to try and offset expected compensation against the likes of Beaufort Securities.

FSCS chief executive Mark Neale says: “Risks rise as people make increasingly complex choices about the investment of their pension pots, even where investors take the sensible step of taking independent professional advice.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Martin Martin 1st May 2018 at 11:37 am

    So, although I have no say or control over who does what in an area that I won’t touch because of the risks involved, I must pay up? The levies would be much more reasonable if the FCA had any hint of control over what is going on.

    My latest theory is that the FCA would be a much better and more effective organisation if their numbers were halved overnight. They’d have to scrap all of the meaningless stuff and re-focus on what matters. Maybe that’s not as daft as it sounds.

  2. Is the cause individuals who were advised to transfer out of their Defined Benefit scheme or, in fact, the underlying assets held in a pension which was ceded from a defined benefit scheme?

    Two very different issues.

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