The latest actual statistics and forecast for claims during the financial year 2016/17 has reached £21m, up from the FSCS’s original forecast of £6m for the year. These higher than expected claims mean the FSCS is expecting to enter a deficit of £18m for the home intermediation class.
As well as higher claims, the uphold rate and the average amount of compensation paid per claim has increased. Claims relating to advice to borrow in non-standard assets, including overseas property, have risen notably, the FSCS said.
In its latest Outlook report for December, Mark Neale, chief executive of the FSCS, said: “As a result of these unforeseen handling costs, FSCS may also need to spend in excess of our approved management budget, but within the reserve allowed for in our Management Expenses Levy Limit (MELL). When fixing the MELL each year, and allowance is made for additional but unforeseen costs. We will also make a decision about this in January.”