Pension firm failures and mis-advice dominate FSCS workload
As part of its 2020/21 Plan and Budget published today, the FSCS said in recent years, it’s seen the continuing rise of complex pension claims.
These claims account for 40% of cases received, double the number relating to PPI.
Consumers often complain about mis-advice in this sector, particularly around transferring out of Defined Benefit pensions as well as wrapping risky and illiquid investments into Self-Invested Personal Pensions (SIPPs).
Nine SIPP operators have failed since January 2018, meaning an annual cost of £209m. It also said it expects to make nearly 8,000 decisions on these SIPP claims in 2020/21, a 114% increase on the previous year.
Given the rise in SIPP claims, the FSCS will increase the levy firms are due to pay in 2020/21. The levy helps fund consumer compensation claims and has been set at £635m, an increase of £87m from 2019/20.
Caroline Rainbird, chief executive of the FSCS, said: “In summary the financial sector faces many changes and challenges as we enter the third decade of the 21st century. Claims are forecast to continue to rise, and we are already experiencing higher claims costs due to the complexity of cases being submitted, which in turn will have a direct impact on the levy for the coming year.
“We recognise the importance of remaining focused, well-resourced and prepared for these challenges, as well as continuing to deliver an efficient, effective and empathetic service. We are confident our Plan and Budget 2020/21 provides us with the resources and strength to meet these demands in the interests of all our stakeholders.”