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DB transfer claims push IFA FSCS levy up £52m

DB transfer claims push IFA FSCS levy up £52m

The Financial Services Compensation Scheme (FSCS) has blamed a rise in defined benefit (DB) pension transfer claims as the source of a £52 million increase in its levy on life and pensions advisers. This includes £10 million the FSCS has set aside for claims against a number of IFAs.

The FSCS has announced a £407 million levy on firms for 2018/19, £71 million more than forecast in its January budget.

In a statement published this morning the FSCS said: 'One of these firms is Active Wealth which advised British Steel workers, among others, to transfer their DB pension schemes into Sipps.'

Active Wealth, which found itself at the heart of the British Steel saga, went into liquidation in February.

This means the maximum levy of £75 million will now be raised on life and pension advisers. The balance – currently forecast as £64 million - will fall on other industry sectors. The amount and timing of any supplementary levy will be confirmed during the year.

FSCS chief executive Mark Neale said: 'Many claims reflect bad advice to transfer pension savings from occupational schemes into Sipps, usually with a view to invest in illiquid and risky unregulated products.'

The FSCS has also increased the levy on the investment provision class by £18 million, which is almost entirely comprised by claims against Sipp operators.

Meanwhile, the investment intermediation sector will see a decrease to the indicative levy of £4 million announced earlier this year. This is owing to recoveries, which offset the increase in compensation payments for claims expected against collapsed discretionary fund manager Beaufort Securities

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