, FSCS Payout Limit Set To Rise To £85k Next Year, Pension Justice

The maximum payout Financial Services Compensation Scheme (FSCS) payout for claims related to investment advice will increase to £85,000 in April 2019.

With the current limit standing at £50,000, this significant rise could see the cost of advisors’ FSCS levies increasing.

The number of investment claims which outstrip the current cap increased from 5% to 13% between 2010 and 2014, according to data from the FSCS funding review.

Had the £85,000 limit already been in pace, total compensation paid out by the fund would have seen a £24.9 million rise per year.

Of that figure, £18.7 million would have been considered investment intermediation class while £6.1 million would be classed as life and pensions intermediaries.

In recent years, many claimants have not been receiving the full compensation.

In fact, between 2015 and 2017, 2,150 investment intermediation claimants did not receive the full compensation while 2,989 life and pensions intermediation claims saw a shortfall.

An £85,000 limit would have reduced the above figures to 725 and 1,440 respectively.

The FCA said: “Any increase in the limits implies a potential increase in levies, but having considered the feedback we received we remain of the view that an increase to £85,000 remains an appropriate balance of consumer protection and cost to industry, particularly given the stark difference in the limits for insurance based annuities versus investment products in the context of pension freedoms.”