The scheme has been forced into raising the levy it charges financial firms by £69 million due to rising SIPP and pensions transfer claims.
The Financial Services Compensation Scheme (FSCS) has forecast it will need an extra £69 million to deal with an increasing area of claims: SIPP and pension transfer claims. This means it will charge financial firms this supplementary levy as claims continue to rise.
The extra levy will be shared across all classes of FSCS businesses, except those in the life and pensions intermediation bracket, since this category has already reached its £75 million limit for the year.
According to the FSCS, SIPP and ‘other pension transfer-related failures’ made up nearly half (45%) of all defaults declared this year and, of these firms going out of business, more than four-fifths (83%) have resulted in claims to the compensation scheme. 'This was due to the larger claims volumes that relate to pension adviser defaults' it added.
Despite seeing lower than expected pension transfer claims between April and June, the FSCS said costs have risen because claims management firms have increased their business in this area and uphold rates have risen.
What is the FSCS?
The Financial Services Compensation Scheme (FSCS) is a statutory deposit insurance and investor compensation scheme. It can compensate clients if a financial firm is unable to. It has often been described as a “lifeboat” fund.
It is independent of the government and the financial industry, and was set up under the Financial Services and Markets Act 2000, becoming operational on 1 December 2001. They do not charge individual consumers for using our service.
Smooth Commercial Law work alongside the FSCS to get clients the compensation they deserve. The FSCS have protected more than 4.5m people and paid out £26bn in compensation.
More SIPP claims to come
The lifeboat fund also said it expected the number of SIPP claims to continue to rise, estimating a further 1,369 claims to the value of £31m in the remaining months of this levy period.
The FSCS is monitoring developments in the sector, such as SIPP operator cases going through the courts, to see how they might impact claims.
How can Smooth Law Commercial help?
At Smooth Commercial Law, our team of experts have extensive experience in dealing with a whole manner of claims that arise from negligent and/or unsuitable financial advice. We are seeing an increase in claims for mis-sold pensions, and have managed to secure compensation for many of our clients.
Should you have a claim, we can deal with your case and look to recover compensation for not just your loss of investment but also any adverse tax liabilities that you may now be facing as well.
You can contact our experienced team by calling the number at the top of this page or by emailing info@smooth-commercial-law.co.uk.