The Financial Services Compensation scheme has forecast its 2027/28 levy will be £360m, a 46% rise from the £247m levy this year.
The compensation body said the rise was due to a combination of lower surplus balances and high SIPP advice claims.
In its November levy update, the FSCS said that while its compensation forecast for this year has risen £25m since May, strong recoveries mean its 2026/27 levy will remain unchanged at £247m.
The compensation body said it expected to have completed £43m in recoveries by the end of this year, 30% higher than originally predicted.
Martyn Beauchamp, chief executive of the Financial Services Compensation Scheme, said: “In recent years we have used available surpluses to reduce the amount firms need to pay. By the end of 2026/27, these surpluses will have largely been utilised, with surplus balances expected to be over £100m lower.
“Alongside this, compensation for 2027/28 is currently forecast to be broadly similar to 2026/27, with a substantial proportion relating to SIPP advice and general investment claims, as well as insurance-related claims.”
The next FSCS outlook will be published in spring 2027, with a budget update also due in the new year.
The FSCS has declared a spate of regulated firms as failed or under investigation in the past six weeks including seven in October and two so far in November.
Last week the FSCS declared a West Sussex Financial Planning firm with seven trading names as failed. The move opened the door to clients of the firm, Global Financial Limited - formerly Graeme Blair Financial Planning Limited (FRN: 134496), to claim compensation from the FSCS if they have valid claims.
In October the FSCS declared seven regulated firms as under investigation or failed including City of London-based wealth manager Bullseye Financial Ltd, which has gone into administration.
Bullseye Financial Ltd (FRN 939395) had been authorised by the FCA since 2011 and served professional investors, according to the FCA. The firm offered a range of investment services, including discretionary portfolio management and 'ready made' portfolios. It also appeared to offer immigration and visa services.