Investment advisers could face Financial Services Compensation Scheme (FSCS) levy of around £30 million in the first quarter of 2014 due to the collapse of life settlement fund promoter Catalyst Investment Group.

The FSCS faced a shortfall of £29.5 million on investment intermediation, which it will claim in the first quarter of next year it said in its latest newsletter.

The FSCS said that it expected the compensation costs to run into the tens of millions of pounds and expects these costs to span the 2013/14 and 2014/15 levies.

The FSCS will start processing individual compensation claims and expects to make payments to eligible claimants by the end of December.

The FSCS has forecasted claims of £136.5 million hitting advisers funding block, which is liable to a bill up to £150 million. It also claims management expenses of £13.4 million for the 2013/14 levy year.

FSCS said: "Whilst there may be limited circumstances in which financial advisers will be liable for investor losses, in light of the default of Catalyst, FSCS will handle investors’ claims against Catalyst first."

Mark Neale, chief executive of the FSCS said: "The pay-as-you go basis on which we are funded means that these failures can then result in a need to raise interim levies. 2013/14 has seen us deal with a number of failures which had not crystallised when we settled our annual levy in April."