The UK's Financial Services Compensation Scheme has announced that it wants to levy £635 million on the financial industry in the next financial year. PIMFA, the UK’s trade body for the personal investment services and financial advice profession, has demurred.

The new FSCS compensation cost - to be levied between April this year and April next, with the final figure to be confirmed in April, stands at an all-time high. PIMFA chairman Liz Field told Compliance Matters that the burden of this was 'totally unsustainable' for her members. She added: "Our research shows that the bills are already such that firms are at breaking point."

A recent survey of PIMFA member-firms showed FSCS costs to be between 1% and 10% as a proportion of turnover. The FSCS bill showed an increase of 200% for some respondents and a 52% increase for financial advice firms. As a proportion of their overall regulatory bill, 86% of large full-service wealth managers participants saw an increase of 57% from last year, and double the amount of stockbrokers are paying above £1 million. Its experts were not able, however, to tell Compliance Matters the proportion of compliance costs that the FSCS bill represented at any firm.

The levy for for 2019/20 was £548 million. The fresh figure, if it turns out to be accurate, will be 16% higher - a hefty extra weight even during these days of galloping inflation.

When talking to other sources, Compliance Matters has heard that about one-third of medium-sized wealth managers are now paying into a higher band of “£501,000 to £1 million” despite the fact that hardly any paid into this band last year. All medium wealth managers have seen the fees they have to pay double in this past year.

All large full-service wealth managers are now reportedly paying in the range of £1 million to £4 million, whereas before it was only 57%. Double the number of stockbrokers are paying above £1 million. All categories saw the FSCS bill increase as a proportion of the overall regulatory bill, but nobody knows by how much. Most financial advisors have to pay insurance premia that are considerably larger than the FSCS levy.