It should be noted, however, that these figures could be subject to change.
The FSCS’ plan and budget published in January 2015 for 2015/16 indicated a total industry-wide levy of £287m.
In March 2015, however, the FSCS announced a £20m interim levy on life and pensions intermediaries; before returning to the market the following month to announce that the final 2015/16 levy would be £319m, £32m higher than first announced.
The Association of Professional Financial Advisers (APFA) submitted a position paper to the FSCS in December stating that levies had hit an all time high in 2015 and had become unsustainable.
The FSCS levy is split into eight broad classes, with first three classes referred to as the PRA classes, and the last five referred to as the FCA classes.
The levy for 2016/17 has been broken down as follows:
Mark Neale, chief executive of the FSCS, said: “The bulk of the levy reflects our forecast of compensation costs and offsetting recoveries. We cannot accurately predict the volume or nature of claims in any year. However, we expect that claims from retirement savers who have been badly advised to hold risky investments in the self-invested personal pensions (Sipps) will continue at current levels.
“We have therefore indicated a levy of £80m on life and pensions intermediaries in 2016/17. The levy on investment intermediaries based on the three-year average, is set at £108m slightly down on 2015/16.”
A management cost is included in the levy, which has been set at £67.4m for 2016/17, a decrease of 2.5% compared with last year.
Lawrence Churchill, chairman of the FSCS, said “Everyone agrees that a compensation scheme in financial services is a must-have, not a just a nice-to-have. The FSCS is just as important now as it was in the financial crisis eight years ago, if not more so, as we are protecting more people for more products.
“As a result of 5.5 million people being auto enrolled in employer pension schemes, there are more people that have the potential to benefit from FSCS protection than ever. Pension freedom is opening new areas of the market.”
