The Financial Services Corporation Scheme will require £276m for 2014/15, a large drop from the £313m prediction it released in its January forecast and £9m lower than the total levy last year.
But, in contrast to the overall drop in expenses, the levy on investment intermediaries has risen to £112m from the indicative figure of £105m released in January.
The FSCS said this was because the processing of claims against Catalyst Investment Group has commenced later than expected, bringing the costs into the next financial year.
Catalyst was censured by the Financial Conduct Authority last year after it was unable to pay a £450,000 fine for “recklessly misleading” investors while promoting bonds between 2009 and 2010.
The FSCS has also predicted that investment intermediation will generate £132.4m in compensation claims over the next year, making it the most demanding funding class ahead of general insurance provision which is expected to require around £121m.
Mark Neale, chief executive of the FSCS, said the variation in levies “underlines the intrinsic unpredictability of the demands on FSCS”.
He said it could lead to the “tentative” conclusion that the financial industry has now passed the peak of PPI claims.
However, he added that this fall could turn out to be no more than a lull rather than the beginning of a downward turn.
'Disproportionate'
The total management expenses charged by the FSCS to budget their running of the fund is £74.7m, an increase on the £74.4m budgeted last year. However, the predicted operational expenses for the past year have been significantly lower than initially forecast, coming in at just £60.8m.
Paul Stanfield, chief executive at the Federation of European Independent Financial Advisers, said levies on financial advisers had increased “dramatically” in recent years.
“It is important to ensure levies are allocated properly and go to the right sector proportionately,” he said. “If one sector is creating huge costs then they should be funding back a higher amount than sectors which spend less.
“Everyone makes mistakes but it sometimes seems that independent financial advisers shoulder the burden of a disproportionate amount of the costs.”
He added that the development of a culture of blame within society could halt the deceleration of overall compensation costs.
“It difficult to predict if compensation costs will increase or decrease,” he said. “I think that it is clear that we are living in an increasingly litigious society where a background of claim culture has built up.
“There is a risk that if this increases then there will be more claims rather than less.”
The FSCS is an independent UK compensation fund for customers of FCA-authorised financial service firms, reserved for instances where a default firm is unable to pay compensation claims against it.
Set up under the Financial Services and Markets Act 2000, it covers deposits, insurance policies, insurance broking, investment business and home finance.
The compensation limits put in place by the fund are unlimited for insurance business and general insurance advice, £85,000 for deposits, £50,000 for investments and £50,000 for home finance.
In March, the body said it was continuing to investigate claims against UK advisory firm TailorMade Independent to determine its “involvement in advising its clients to transfer existing pensions into Self Invested Personal Pensions” that were then invested in risky products.
It said it was trying to determine whether it was able to pay compensation to TailorMade clients who had lost money in such schemes as Green Oil Plantations and Harlequin Hotels and Resorts.
