The Financial Services Compensation Scheme is facing total legal costs of £30m in its attempt to recover compensation from advisers who recommended clients invest in Keydata.
This is close to half the £75m the FSCS said last year it expected to recover in Keydata compensation.
In a consultation paper published this week on FSCS management expenses, the FCA proposed a budget of £15.1m for major recoveries expenses for 2014/15, which includes a £7.2m budget for Keydata recovery costs.
It is on top of the £7.2m set aside for Keydata recoveries in 2012/13, as well as recovery costs of £7.7m in 2012/13 and £7.9m in 2011/12 for Keydata and other recoveries.
The consultation paper proposes an overall reduction in the FSCS management expenses levy limit of 15 per cent to £80m.
The MELL is the maximum amount the FSCS can levy in a year for management expenses. Management expenses are separate from compensation costs and are not included in the sub-class cap calculations.
The FCA proposes setting the MELL at £80m for 2014/15, which is made up of a minimum levy of £74.7m and a contingency reserve of £5.3m.
It compares with a total budget of £94.4m for 2013/14, which consists of a minimum levy of £74.4m and a contingency reserve of £20m.
Investment Quorum chief executive Lee Robertson says: “The FSCS is spending a huge amount of money on Keydata recoveries for what appears to be ever diminishing returns.”