Money pounds cash Pensions Insight

The Financial Services Compensation Scheme (FSCS) has announced its levy for 2016/17 will be £337m - £26m less than forecasted in its plan and budget for 2016/17.

The levy in 2015/16 totalled £319m.

The calculation of the FSCS annual levy is made up of several different components.

It is primarily driven by the forecast of compensation costs, but it has to be adjusted to reflect both unspent balances or deficits carried over from the previous years and recoveries.

The final levy also includes FSCS management expenses.

Management expenses will fall for the second successive year.

In 2016/17, the budget totalled £67.4m.

The FSCS said most industry sectors will contribute less to the overall levy in 2016/17 than FSCS forecast in January.

But the exception will be the life and pensions intermediaries sector, which will pay a levy of £90m in 2016/17 - up from a forecast of £80m.

The increase reflects a higher average cost of claims arising from advice about investments in self-invested personal pensions (SIPPs). In 2015/16, life and pensions intermediaries paid a levy of 100m.

FSCS chief executive Mark Neale said: “The annual levy allows us to compensate customers. That generates consumer confidence and trust in the industry.

“We look forward to the forthcoming review by the Financial Conduct Authority into how FSCS is funded, and will play our part in discussions. I encourage the industry to play a full role in the debate.”