This was because it no longer needed to invoice the retail pool for the £116m it expected to cover claims made against the investment provision sector.
Each financial services category was expected to contribute £9m to make up for the self-invested personal pension (SIPP) operators breaching its annual levy limit of £200m. However, claims against the sector were £106m lower than forecast and many are yet to be processed with the Financial Ombudsman Service.
The FSCS now expects these claims to come through during the 2022/2023 financial year and does not expect to raise any more levies this year.
The Association of Mortgage Intermediaries (AMI) said it was surprised that the retail pool had been deferred to next year. It was also shocked that the Financial Conduct Authority (FCA) had not been asked to invoice an interim levy as part of this year’s costs.
Robert Sinclair, chief executive of AMI, said: “AMI is pleased to see that the FSCS does not need to invoke the retail pool for financial year 21/22, so avoiding an interim levy on mortgage and protection firms in the new year.”
The indicative levy forecast for 2022/2023 is £900m. This includes £400m relating to compensation for failures that have not yet occurred.
Mortgage broker levy
Mortgage advisers paid £3.6m for the financial year 2021/22 and this is forecast to fall to £1.5m for the next financial year.
However, the sector may need to contribute £7.7m towards a retail pool to cover the life distribution and investment intermediation (LDII) sector.
The LDII sector is predicted to breach its £200m annual levy limit next year and require funds from other sectors.
AMI said the prospect of the retail pool being added to next year’s bill was still “uncertain”.
Sinclair added: “For 22/23 we remain concerned about the costs being transferred from bad behaviour in the pensions and investment markets on our innocent member firms. The continuing retail pool liabilities being added will not be charged until later in 2022, but this guillotine hanging over the heads of mortgage firms is stressful and unwelcome.
“We are concerned that 73 per cent of the FSCS costs come from advice more than five years ago. This means that any actions taken by FCA today will have limited short-term impact. The industry needs a better solution to this compensation mess.”
“AMI stands ready to work with the FCA and FSCS to establish a better and fairer funding mechanism for the FSCS. Previous work on the scheme has seen the FCA at its best in promoting constructive debate. We hope the doors to a new debate will be opened soon,” Sinclair added.
