Financial services firms will be hit by a higher than expected Financial Services Compensation Scheme (FSCS) levy in the coming year thanks to the rising cost of servicing payment protection insurance compensation claims.According to the FSCS's Plan and Budget, PPI will be the "most significant" claim area in the 2012-13 financial year. In fact, PPI claims are expected to continue rising as more instances of misselling come to light.Insurance firms will pick up more than half of the £221 million compensation levy in the coming year - paying £120 million of the total.This is compared to last year's payment of just £69.5 million in the general insurance sector.Mark Neale, chief executive of the FSCS, said: "Our accountability to our stakeholders and our commitment to keep costs to a minimum remains a key priority for us.""A major focus for us in the coming year will be to pursue recoveries from major failures in order to reduce the costs on the industry," he added.PPI has been blamed for falling profits at Santander recently, with just £993 million recorded this year - down 40 per cent on last year's figure.Charles BakerCharles is a reputed financial analyst with decades of experience under his belt.
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