Advice 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.”