Financial Services Compensation Scheme levies for the coming year will reflect the growth in claims from poorly advised defined benefit pension transfers, chief executive Mark Neale has said.
In a blog published this morning Neale writes that the levies – to be published in April – will show the claims to do with pensions have been rising for some time.
These mostly concern bad advice to move pension savings out of an occupational scheme and into a Sipp in order to hold risky and illiquid assets.
Neale linked the risk of DB transfers to a series of studies commissioned by the lifeboat fund which found that awareness of the FSCS is likely to lead to less risky product choices and greater sales of regulated products covered by the scheme.
Advised clients are particularly likely to think the FSCS is important, but are also less likely to question the cost of that advice if they are aware of the FSCS’ protections.
However, only 23 per cent were aware of the compensation limit for pension claims, and 61 per cent discussed the scheme only when their client prompted them.
The FSCS has established a new working group from the industry to look at how information on the FSCS should be disclosed to consumers to see if a standardised format can be reached.