The Financial Services Compensation Scheme (FSCS) plans to increase its levy on financial service businesses by 17% in 2014/15 with an additional £30 million charge on investment intermediaries.
The broad levy, charged to sector businesses to cover the cost of business and other failures, will rise from £285 million to £313 million.
That excludes a specific £30 million charge on investment distribution businesses however, to ‘cover a potential deficit in this class’, bringing its overall charge for sector businesses to £105 million, and the total levy for the period to £343 million.
FSCS chief executive Mark Neale said: ‘Our mission is to provide a responsive, well-understood and efficient compensation scheme for customers of financial services, which raises public confidence in the industry.’
The organisation’s plan and budget, which will remain open for consultation to 21 February, anticipates a 20% increase in the volume of new claims, primarily due to the continuing fallout from payment protection insurance claims.
The charge levied against investment intermediaries reflects the expected volume of claims related to the failure of Catalyst Investment Group over its promotion of funds managed by ARM Asset Based Securities, which has been suspended since 2011.
For the first time the FSCS has calculated the 2014/15 levy over 36 rather than 12 months. It said that this was intended to reduce the volatility of charges, which in recent years have had to be topped up with secondary levies to cover the total cost of compensation.