Sipp-related advice complaints to remain at high level

FSCS bosses said today they see no end to the high numbers of Sipp-related advice complaints next year. The organisation announced this morning that the total levy to fund the FSCS will rise in 2016/17 to £363m – and said it anticipates a significant amount of claims from badly advised savers to continue.FSCS chief executive Mark Neale said: “We expect that claims from retirement savers who have been badly advised to hold risky investments in their Self-Invested Personal Pensions will continue at current levels.”The FSCS annual report stated: “As we have highlighted, FSCS has received a significant number of claims against independent financial advisers in relation to advice given to transfer funds from existing pension schemes to Sipps.{desktop}{/desktop}{mobile}{/mobile}“The majority of claims concern advice to invest Sipp funds into high risk, non-standard asset classes, many of which have become illiquid.“We expect to see further claims in this category along with other types of life and pension claims throughout 2016/17. However, there remains uncertainty as to the number and value of claims that FSCS will see going forward, which will impact on costs to the industry. FSCS will update the industry on developments.”The overall FSCS levy will increase by £44m, up from £319m in 2015/16, though pension and life intermediaries face a lower bill of £80m, down from the £100m in the current financial year. Investment advisers will have to fork out £108m in total, a decrease of £8m.Mr Neale said: “These levies bring into sharp relief the importance of the FCA’s forthcoming Funding Review which, in consultation with the industry, will examine how our levies are pooled across firms.“We understand the issues faced by some firms in meeting our costs and the perceived unfairness of paying for someone else’s mistakes. We are grateful to those who have already shared their concerns over the way levies are currently determined and, with the FCA in the Funding Review, look forward to further debate on how best to resolve these concerns, while maintaining protection for the consumer.”“We have therefore indicated a levy of £80m falling 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. This reflects the continuing expectation of demands on FSCS for claims made on this sector. We also forecast increased levies on the deposits and general insurance provision and intermediation classes.”Lawrence Churchill, chairman of FSCS, said: “For the second year in succession we are budgeting for management expenses to be lower than the previous year.“Operating costs are falling for the second year: management expenses are coming down, from £69.1m in 2015/16 to a proposed budget of £67.4m in 2016/17. We work hard to keep the costs of operation down and I’m sure this reduction will be welcome news to levy payers.”

Sipp-related advice complaints to remain at high level - FSCS

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