Investment advisers face extra £28m in FSCS levies

FSCS Interior 480

Investment advisers are facing a further £28m in Financial Services Compensation Scheme levies due to the collapse of Pritchard Stockbrokers and Worldspreads, with more claims expected relating to MF Global, Arch cru and Rockingham.

In its Outlook newsletter, published today, the FSCS has forecast a £25m interim levy on the investment intermediation class for 2012/13 due to higher than estimated compensation costs relating to Pritchard Stockbrokers and spreadbetting firm Worldspreads.

Advisers within the life and pensions intermediation class are not facing additional interim levies.

The forecasted £25m interim levy on investment advisers is not expected to trigger the fund manager cross subsidy, which kicks in once adviser claims breach the annual £100m limit. The FSCS has so far levied £66m on investment advisers this year, leaving £34m in claims before the limit is reached.

The FSCS also allowed firms to resubmit their tariff data on which the levy was based for 2010/11 after inconsistencies emerged about the way firms were reporting income.

As a result of resubmissions the FSCS has calculated that a total of £71m was overpaid by firms, which means this amount needs to be refunded to those who overpaid and redistributed to the industry.

Fund managers face a redistribution levy of £33m while investment advisers face a redistribution of levy £3m. The £3m will be levied on advisers in addition to the £25m interim levy for 2012/13.

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FSCS 2012/13