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FSCS announces £87m pension advice levy as Sipp ‘mis-selling’ continues

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FSCS announces £87m pension advice levy as Sipp ‘mis-selling’ continues

Life and pensions advisers are set to pay £87 million for the Financial Services Compensation Scheme (FSCS) levy in 2018/19, the lifeboat has said as ‘Sipp mis-selling’ continues.

This £87 million figure is down from the £100 million total levy for life and pensions advisers in 2018/19. However this total for 2018/19 is only over a nine month period reflecting changes the FSCS is making to its financial years.

The total amount the FSCS is levying across all firms is £336 million for the 2018/19 year. Investment advisers are expected to pick up a levy of £46 million, compared to £88 million in 2017/18. 

The provisional £87 million figure for life and pensions advisers goes beyond the £75 million cap for this class, meaning £12 million will be levied from the retail pool.

‘This means that the maximum would be levied for the fourth consecutive year and the retail pool would be triggered for the third year in a row,’ the FSCS said.

The lifeboat said the reason for the continued high levies on life and pension advisers is advice on Sipp investments which are ‘high risk’ and ‘non-standard’.

‘FSCS continues to receive significant numbers of claims against independent financial advisers regarding advice given to customers to transfer existing pension arrangements into Sipps,’ the lifeboat said.

‘FSCS expects to continue to see increased numbers of this type of claim, along with other types of life and pension related claims in 2018/19. This will lead to an increase in compensation costs because of the typically high value of these claims. That said, uncertainty remains as to the number and value of claims that FSCS will receive in the coming period,’ the lifeboat said.

When discussing Sipp claims the FSCS specifically referred to overseas property scheme Harlequin in the Caribbean.

The lifeboat said so far £100 million has been paid out ‘to 2,500 consumers following SIPP-related mis-selling by IFA’.

 

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