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Life and pensions advisers see FSCS levy triple to £40m

Life and pensions advisers face a tripling of their Financial Services Compensation Scheme annual levy, from £13m to £40m.

The FSCS 2014/15 plan and budget, published today, proposes increasing the annual levy for life and pensions advisers to £40m for the next financial year, up from £13m for 2013/14.

It says it has started to see an increase in pension claims, including claims relating to Sipps, and expects more claims in this area in future.

The 2014/15 levy is the first to be calculated under the FSCS’s new 36-month funding approach, which it says will reduce the volatility of annual levies and the likelihood of interim levies.

It has therefore based levy calculations for each class on the average compensation costs over the past three years, expect for life and pensions intermediaries.

The FSCS says this is because “the level of claims we are receiving indicate a rising trend. We have therefore uplifted the levy amount for that class.”

Investment advisers face an annual levy of £105m for 2014/15, up from an annual levy of £78m for 2013/14.

However, the FSCS also expects to raise an interim levy of £30m on investment intermediaries before the end of the current financial year, taking costs for 2013/14 to £108m.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. Here we go again. FSCS must think there is a bottomless pit out here.

  2. It must be lovely to run an organisation with no budget responsibility & no control levied on you , where when you run out of money you simply bill your captive clients.

  3. Its never ending is it? What we are seeing now is a double edged sword. Encourage claims by the bucket load, do nothing about claims chasers and create a regime where everything that was done in the past is open to floodlight scrutiny. As the numbers of advisers inevitably decrease there’s less of us to pick up the bill, so this is a self fulfilling prophecy in more ways than one. I only wish I had the ability to set a levy for the next three years (36 Months) but the way this is going I have my doubts I’ll be there to see it.

  4. Its a rather odd world that we frequent, where advice and investment costs are on a gradual race to the bottom, yet the regulators appear to constantly head in the opposite direction. I’m wondering if the gamekeeper hasn’t turned poacher. FT MM – why not ask for average pay levels (the full package including the pension) and compare it against the typical adviser/admin/paraplanner….if we are all being asked for reduced costs and improved efficiency, this must cut both ways.

  5. Wring every last drop out of the bottle before it finally runs dry!

  6. I’ve just realised I will just have to pass the cost on to my clients through increased fees. Boy will they be unhappy, but I’m sorry, this one isn’t my problem (nor is it theirs, as they have a good adviser, but hey-ho, someone has to pay for all of this peripheral, continuing damage which is being caused within the industry and the associated costs of putting it right, and my pockets are certainly not bottomless!).

    Increasing regulatory fees inevitably means more cost for people who purchase financial advice and products, think about this….I mean really think about this. Is this what is intended under RDR?

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