"We begin the year with the risk of a supplementary levy later in the year which, if it became necessary, would result in costs falling on other sectors"
In its final levy publication, the FSCS predicts lower overall life and pension compensation costs next year of £146m, compared to a forecast of £163m in January, due to a fall in the average cost of SIPP-related claims.
However FSCS Chief Executive, Mark Neale, said: "This is still well above the annual threshold for this sector, but in view of the volatility of these claims, we plan to raise an initial levy to the limit of £100m.
"This means that we begin the year with the risk of a supplementary levy later in the year which, if it became necessary, would result in costs falling on other sectors through the retail pool."
The overall levy for next year totals £363m - a £15m reduction from the initial forecast due to lower than expected compensation costs in 2016/17, but an 8% increase from last year's total.
Investment advisers will see a £4m increase in their 2017/18 levy to £88m, but general insurance brokers will end 2016/17 with a surplus of just over £20m due to the FSCS receiving better claims data from brokers in relation to the failure of Enterprise Insurance.
Mark Neale continued: "In all we shall levy £363m to help fund compensation costs which we currently estimate at £446m.
"I should caution that the use of the word “final” by no means guarantees that our forecasts of compensation costs – and hence our levies – will prove definitive.
"The levies are “final” only in the sense that they reflect the best and most up-to-date assessment we can make of likely compensation costs before the year begins.
"As we saw in 2016/17, when we were obliged to raise three supplementary levies but were also able to make a substantial return of funds to investment advisers, much can happen during the year for better or worse. We do not have 20/20 vision."
