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FSCS shells out 123m in SIPP-related compensation in 2018/19

June 27, 2019
Source:
Professional Adviser

The Financial Services Compensation Scheme (FSCS) paid out £123m for claims relating to SIPPs in its 2018/19 financial year - up £11m from the previous period.

Compensation for SIPP-related claims made up 26% of all compensation paid out in the lifeboat fund's latest financial year.

According to the FSCS's annual reports and accounts, a total of £473m in compensation was paid to 425,760 customers of failed firms during 2018/19 - around £68m more than the amount it paid out in 2017/18.

To fund its work and compensation payouts, FSCS raised levies on 49,224 financial services firms for the 2018/19 period, raising a total of £517m.

Back in January, the lifeboat fund said it would have to demand an extra £78m from financial advisers for the 2018/19 levy year as a result of the rising costs of claims against them. The supplementary levy means that, in total, advice firms paid a total of £197m towards the running of the lifeboat fund in 2018/19.

The next levy period - 2019/20 - will be the first funding year where providers have to chip in around 25% of the costs to help advisers out. With this in mind, advisers will pay a forecasted £153m to the running of the FSCS, with providers are set to stump up the remaining £58m.

'Diligent work'

FSCS chief executive Caroline Rainbird said: "We recognise we were only able to pay compensation to so many thousands of people because of the firms who paid our levy and the diligent work of FSCS staff who successfully pursued recoveries from the estates of failed firms.

"As we continue to see a rise in SIPP-related claims, we are working with our partners in industry through our Prevent pillar to gain valuable insight into the causes of firm failures and about the directors and advisers involved in mis-selling."

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