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FSCS predicts claims against pensions advisers have peaked

FSCS-Piggy-Bank-Alt-500x320.jpgThe Financial Services Compensation Scheme is predicting that life and pensions advice compensation payouts will fall over the next year.

In its budget for 2018/19 released today, the FSCS notes that while the three-year average for compensation claims over life and pensions intermediation is £83.8m, a falling trend from a peak two years ago should result in a comparable figure of £76.8m in the coming period.

This is despite a projected increase in the number of claims against life and pensions advisers from 6,720 to 7,162.

Investment advice compensation costs are set to drop from a £58m average to £39m, with 1,000 fewer completed claims expected.

The FSCS has also pledged to claw back more money over failed Sipp cases through legal proceedings.

FSCS notes that it was able to return around £100m to the industry through litigation in cases such as the collapse of life settlement bond firm Keydata, and has been successful this year through legal proceedings around payment protection insurance.

The budget reads: “Into next year, we shall increase our focus on pursuing cross-jurisdictional recoveries where the underlying investment (in Sipp mis-selling and other similar cases) has failed.”

The FSCS says an example of this has been Harlequin, where property developments in the Caribbean mis-sold by IFAs have led to around £100m in compensation being paid out so far.

FSCS chief executive Mark Neale says: “Our customer service is much enhanced, thanks to our investments in technology and process. We improved our value for money and the transparency of our reporting and there has been significant innovation in how we deliver our service. Awareness of FSCS protection is now at record levels and the legacy of the 2008 banking failures is now mostly resolved.

“FSCS is in a position of greater preparedness for future failures thanks to planning and testing work and we have become a more professional and resilient organisation. We are, in short, in good shape to face the challenges ahead.”


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

  1. It woudl be interesting to see the details of the recovery of monies with regard Keydata as there was over £103 million I believe actually stolen by David Elias from underneath everyone’s noses.
    If the return of all other monies is not far of the what the underlying policy values were, then arguably, the original trigger for the Keydata collapse being a (I think) 7 million or so error over ISA eligability and resulted incraesed tax payable to HMRC, woudl indicate the problem was systems and controls (including those of the F-pack itself) rather than the principle idea of Life Settlement Plans as expounded by Dr Debbie Harrison, former visting lecturer of CASS Business School, Times writer and consultant to the DWP & Govt who from about 2004 until the Keydata problems surfaced, thought they were a good idea as part of a clients portfolio (say 5-10%)

  2. I shan’t be holding my breath for any respite, not least because I think there are plenty more defaults yet to come in respect of uninsured liabilities relating to failed UCIS.

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