FSCS sets £130m levy on general insurance firms

The Financial Services Compensation Scheme (FSCS) is to raise £130m from general insurance firms to pay compensation for general insurance claims, such as those from Independent Insurance and Chester Street.

The FSCS said it also intended to raise £33.2m from investment firms relating to non-pensions review investments, such as endowments, as well as £55m for anticipated pensions review compensation costs affecting firms in the ring-fenced A16 Pensions Review contribution group.

The funds raised will be used to cover compensation pay-outs and management expenses during 2004 and 2005, said the FSCS.

FSCS chief executive Suzanne McCarty said: “these levies should come as no surprise. We indicated last year that a levy would be required on general insurance firms.

"We have also been highlighting the rise in claims against investment firms for products such as endowments for some time.”