Sipp firm warns FSCS bill could rise

The increased FSCS levy could mean total regulatory costs for Sipp operators in the sector could rise by an additional 75% this year when compared with 2014. That is the forecast which has been made by Suffolk Life, with the company estimating the FSCS bill could as much as 150% of 2014 levels for some firms.In April the FSCS said advisers would have to cough up £100m and blamed the rise on increasing claims linked to Sipps.The levy for 2015/16 jumped up from the estimated £57m announced in January and the overall figure for across the industry went up up by £32m to £319m.With the FSCS on record as expecting Sipp related claims to continue to rise in 2015/16, Suffolk Life’s head of communications and insight, Greg Kingston, suggested that further pressure on Sipp operators could result in increased fees for Sipp investors.Suffolk Life also highlighted that any longer term increases to FSCS protection levels will drive regulatory costs even higher.Mr Kingston said: “Our estimates show that Sipp operators will experience a rise in the FSCS fee by as much as 150% in 2015 and, should the level of FSCS protection available increase along with the volume of claims, these fees will continue to rise.” {desktop}{/desktop}{mobile}{/mobile}He pointed out that the regulatory cost of a Sipp operator comprises a number of elements including periodic fees for the FCA and PRA as well as levies for the Money Advice Service, Financial Ombudsman Service, Pension Guidance and Financial Services Compensation Scheme.Mr Kingston said: “FSCS costs for Sipp operators have not come under scrutiny since 2011, when the then record interim levy drove some Sipp providers to consider interim and immediate one off charges to their investors.“With Sipp operators already under financial pressure to meet the regulator’s new capital requirements ahead of September 2016, some of them may be unable to rule out taking similar action should the size of the levy and FSCS protection limits increase.”

Sipp firm warns FSCS bill could rise

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