Consumers could get back money they have lost as a result of their dealings with three operators of self-invested personal pensions which the Financial Services Compensation Scheme has declared to be in default.

The FSCS has received approximately 150 claims for compensation against Brooklands Trustees Limited, Stadia Trustees Limited and Montpelier Pension Administration Services Limited. The claims relate to the way in which these firms established, operated and administered SIPPs through which consumers invested in non-standard investments such as storage pods, oil fields, diamonds and overseas property.

Mark Neale, the CEO of the FSCS, pronounced himself satisfied that certain claims were eligible for compensation and said that he expected to receive more claims of this nature in the coming months. The FSCS will be getting in touch with customers to see if it can help.

Since it began in 2001, the FSCS has helped more than four-and-a-half million people, paying out more than £26 billion in compensation. It has just published its business plan and budget for 2018. In it, it predicts that SIPP and PPI (payment protection insurance) claims will increase in number this year. It will make its announcement about a final levy in April.

In the case of Plevin v Paragon Personal Finance Ltd (2014), the Supreme Court of the UK said that in some circumstances an undisclosed commission on PPI could result in an unfair relationship between the lender and consumer according to the Consumer Credit Act 1974. The FSCS is in the process of deciding whether it ought to be covering claims on the subject.

Before the FSCS can pay compensation it must be satisfied that a firm does not have enough assets to meet claims. It describes this as being ‘in default’. This is the case with Strand Capital, which the FSCS declared in default last August. This wealth management firm formally entered special administration in May after assessors found it insolvent, with perhaps 3,000 customers expected to suffer to some degree. Strand Capital managed five model portfolios, all with a minimum investment of £10,000.

The FSCS business plan and budget document says of the discretionary fund management (DFM) firm: "Whilst we have no reason to believe that a large investment default is likely, there is an uncertainty around the costs to the FSCS from Strand Capital. We expect compensation costs of £6 million for client assets and potentially additional compensation for mis-sellilng or negligence claims."

Historically, the scheme has had to respond to unexpected failures where firms such as Alpan have been placed into the Special Administration Regime. Accordingly, the FSCS has elected to raise levies on a 36-month rolling average in recent years because it considers this the best way of allowing for unforseen failures in a reasonably manner.

The FSCS is proposing to increase the sum it levies from the financial sector by £16 million. The indicative levy for 2018/19 is £336 million, in comparison with £320 million raised in 2017/18 (£316 million, with supplementary levies of £24 million, bringing the total up to £340 million, but then a £20 million refund bringing it back down to £320 million).