The Financial Services Compensation Scheme (FSCS) has increased its levy for 2019/20 by £16m to £532m, after an uplift in claims against Self-Invested Personal Pension (SIPP) operators.

The lifeboat said the main driver of the compensation costs was again driven by pension claims which “continue to arise from bad advice to transfer retirement savings out of occupational schemes and into SIPPs”.

In January, the FCSC published its Plan and Budget 2019 in which it said pension providers and advisers would be expected to contribute £240m to the levy, an increase of £43m on the previous nine months.

However, as a result of the changes, the levy on life, pensions and investment advisers has decreased by £22m, offset by a £38m increase for investment providers.

FSCS outgoing CEO, Mark Neale, said: “These trends underline the importance of the greater weight which FSCS intends to give in its strategy for the 2020s to both promoting awareness of FSCS protection and to preventing the mis-selling and advice failures which underlie these costs.

“We shall need the support of our partners in the industry and in the FCA in both respects.”

Delivering a speech last month, Neale said that facing up to pension freedoms is the biggest challenge facing the FSCS over the next decade, with the lifeboat paying out £581m in the five years since pension freedoms, compared to £80m in the four years before it took effect.

Despite this, research conducted by the group found that three-quarters of consumers are unaware that pensions products are protected by the lifeboat.

“Promotion and Prevention are the counterparts of our continuing and undiminished commitment to be prepared for failures when they occur and to provide an excellent service to consumers who need our protection as a result of failure,” Neale added.

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