The Financial Services Compensation Scheme (FSCS) has cut its interim levy for investment intermediaries for 2012/13 from £25m to £20m, and has said it will not rule out pre-funding as a means of raising cash for the scheme.
For insurance intermediaries their interim levy will fall from £20m to £16m.
However the reductions in the interim levy for investment intermediaries comes amid an annual levy for the group for 2013/14 of £76m.
The FSCS said the need to raise interim levies at all reflects higher compensation costs for FSCS than it expected when it set its levies for 2012/13 back in the spring of last year.
That means the levies it raised then will not be sufficient to meet the compensation it now expects to pay before the 2013/14 levy becomes available from July.
On the investment side, the FSCS said it must meet continuing claims from investors as a result of the failures of Pritchard Stockbrokers and Worldspreads Ltd.
The FSCS said the interim levies - which the scheme has had to raise for four consecutive years - illustrates the "simple unpredictability" of the demands on it.
"It underlines that, even over periods as short as a year, FSCS often has no visibility of impending failures when the annual levy is set or, even if it does, cannot readily quantify claims before they arrive."
The FSCS said it tries hard to avoid taking capital out of the industry before it needs it and so set levies to meet only those compensation costs that it can be reasonably confident about.
It said as part of the FSA's review of FSCS' funding, it has looked at ways of smoothing our levies over a three year period while sticking to the principle that it should not ask the industry for more money that it needs.
It will publish a paper shortly setting out its proposed approach to achieve this, and said it will not rule out pre-funding.
"Pre-funding would be a fundamental change of approach because it would involve taking money from the industry ahead of need. Its upside, on the other hand, is that it would lead to predictable demands which businesses could build into their business models."
'Exact timescale' of complaints not yet provided
1,400 reviews of adviser technology
To engage next generation
Now accessible to all
Some scheme’s ‘fib’