Sipp firms under pressure to raise fees as FSCS levies soar


Sipp customers may have to pay higher fees as providers see the cost of complying with regulation soar 75 per cent this year.

Legal & General-owned Sipp firm Suffolk Life warns total regulatory costs have jumped 75 per cent, driven by the increased Financial Services Compensation Scheme levy which it says could be as as much as 150 per cent higher than 2014.

Head of communications and insight Greg Kingston says some firms may have to increase client fees if levy costs and protection limits rise.

New capital adequacy requirements on providers also come into effect in September 2016.

Kingston says: “FSCS costs for Sipp operators have not come under scrutiny since 2011, when the then record interim levy drove some Sipp providers to consider interim and immediate one off charges to their investors.”

He adds: “Our estimates show that SIPP operators will experience a rise in the FSCS fee by as much as 150 per cent in 2015 and, should the level of FSCS protection available increase along with the volume of claims, these fees will continue to rise.”

Payouts against life and pension advisers have jumped 88 per cent over the last year from £18.7m to £35.2m, according to the FSCS’s annual report published this month.

The amount of compensation for Sipp claims against advisers has risen by 50 per cent.

Average payments rose from £11,104 to £16,375 this year, triggering a £20m interim levy on life and pensions intermediaries announced in March.

The FSCS says complaints and payouts related to Sipps are “likely to rise steeply” next year, despite the overall number of new claims across all products falling from 39,258 to 31,762 this year.