Britain's official financial compensation fund has cut its estimated levy on financial firms by around 21 per cent but warned an additional levy was likely amid uncertainty over claims relating to complex investments.
The Financial Services Compensation Scheme, which pays compensation to consumers if a company is unable to, said its initial levy for the 2005-2006 financial year would be £160.7 million compared to an original forecast of £202.9 million after it excluded funding for claims from savers hit by large losses in split-capital trusts.
The FSCS said there were still significant uncertainties about the likely number of claims arising from split-cap trusts, which often used bank debt to enhance returns and were hammered when stock markets tumbled in 2000.
A spokeswoman for the FSCS declined to comment when an additional levy relating to split-caps would be levied or its likely size. The FSCS had originally proposed a £27 million levy for the 2005-2006 financial year.
Financial groups such as insurers, banks, fund managers and stockbrokers fund the FSCS but many have complained about having to pay for the sins of others after the recent bear market threw up thousands of compensation claims.
In the 2004-2005 financial year, financial firms paid out around 238 million to the FSCS.
Britain's financial regulator said it would discuss with industry members later this month whether a review of the current fee structure should be considered, which could eventually mean that some firms pay more and others less.
A spokesman for the Financial Services Authority said the total level of funding was not up for discussion and cautioned that any change on the structure would take at least two years because it would require extensive consultation.
The UK stockbroker association APCIMS welcomed the FSA's decision to discuss the fee structure.
"What is happening at the moment is that private client stockbrokers and wealth management firms are being requested to pick up the tab for failures of totally different types of institutions," Angela Knight, the chief executive of APCIMS, said in a statement.
"This is manifestly unreasonable as our legal advice confirms."