You are here: Home - News -

Broker FSCS levy drops to £3m

by:
  • 16/01/2020
  • 0
Broker FSCS levy drops to £3m
The levy paid by mortgage intermediaries to the Financial Services Compensation Scheme (FSCS) will drop to £3m for the 2020/21 financial year.

 

That’s according to the new budget and plan released by the FSCS for the coming year, and represents a 25 per cent drop from the £4m brokers paid for the current financial year.

The levy goes towards compensation payouts from the FSCS to wronged consumers, with the contribution from ‘home finance providers’ unmoved at £1m. 

In contrast, life, pension and investment intermediaries will see their levy hiked from £189m to £239m.

The plan reveals that the FSCS has received more claims related to brokers than expected. It had forecast 865 cases involving intermediaries for this year, but its revised forecast is up by 37 per cent at 1,183 cases.

Despite this it expects just 744 cases next year.

The FSCS said that the increase in claims this year for unsuitable advice were mainly related to interest-only deals. However, it noted that the majority of these have been rejected due to insufficient evidence of negligent advice.

As a result, while there has been an increase in decisions made, there has been a decrease in the uphold rate, meaning no real difference in actual compensation costs.

Yesterday the FCA and PRA revealed that the management budget for the FSCS would have to be raised, blaming the an anticipated rise in both the number and complexity of cases faced.

There are 0 Comment(s)

You may also be interested in

Read previous post:
United Trust Bank extends bridging to Scotland

United Trust Bank (UTB) has extended its short- and medium-term finance service into Scotland.

Close