FSCS is planning to levy £363m in the next financial year

Catherine Neilan
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The number of "badly advised" savers using Sipps is expected to rise (Source: Getty)

The Financial Services Compensation Scheme (FSCS) is expecting to levy £363m from the City in the next financial year, warning of a rise in pension claims.

The final figure for the levy will be announced in April, and the plan is currently under consultation.

However, the FSCS has indicated that it expects pensions savers - particularly those in higher-end vehicles such as self invested personal pensions (Sipps) - to make more claims in 2016/2017.

"Although FSCS cannot accurately predict the volume or nature of claims in any year, it expects further claims from retirement savers who have been badly advised to hold risky investments in their Sipps," it said this morning.

As a result FSCS expects to levy the life and pensions intermediaries sector £80m. The levy on investment intermediaries, based on the three-year average, is set at £108m, slightly down on 2015/16.

The body said its own costs were likely to drop by £2m amid an organisational change that it expects to improve customer experience.

That includes rolling out an online portal, where customers can submit claims. This is currently being tested, but the FSCS says that once at its "full potential" the portal will allow the body to "scale up and down efficiently in response to unpredictable demands".

Other areas of modernisation include speeding up payments to claimants who had savings in failed banks, the "overwhelming majority" of which are now paid in seven days.

Mark Neale, FSCS chief executive, said: "I am happy to report that our management and operating costs are lower than last year again. It's an indication of our commitment to value for money.

"One of our key imperatives is modernising our claims handling system and we have taken steps towards achieving this. We are pushing ahead with further changes that will make life easier for consumers. An online portal, through which they can submit claims, is being tested. In time, it will provide a more efficient service that, ultimately, transforms customers' experience.

"Overall, we're moving towards streamlining our claims, reducing management and operating costs, which benefits our levy payers, and creating a better experience for consumers."

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