The FSCS has announced it will raise an additional £24m in the 2017/2018 year due to an increase in Sipp-related claims.
While the six-month average cost of each Sipp-related claim has reduced from £30,000 to £23,000 over the last year, the number of claims has risen 4 per cent.
There was also an increase in the overall uphold rate from 61 per cent to 66 per cent.
FSCS chief executive Mark Neale wrote in an industry outlook published this week that the cost will trigger a cross-subsidy and fall on the funding pools that include retail financial advisers.
He said: “[In April] I cautioned that we did not have 20/20 vision and that our levies for the year ahead were only ‘final’ in the sense that they represented the best assessment we could make on the information then available,” Neale said.
The FSCS forecast in April that Sipp-related costs would amount to around £146m, but chose to raise a levy of only £100m – the maximum for the sector.
“We levied to the amount of the limit rather than triggering the retail pool, because of the uncertainty around the number of claims and their value,” the FSCS outlook says.
The lower than expected compensation payments meant the compensation forecast was now £15m below the original forecast, but the additional levy still had to be raised.