The Financial Services Compensation Scheme (FSCS) expects costs linked to failed wealth firm Strand Capital to hit £6 million.
The FSCS said the £6 million compensation costs are linked to client assets and potentially additional compensation for mis-selling or negligence claims.
Shortly after its collapse in May 2017, administrators warned Strand clients they may face a long wait to find out whether they will get all of their money back.
Earlier this year Wealth Manager revealed that a lack of full client records has posed challenges for the administrators.
The failure of Strand contributed to what the FSCS expects to be a £16 million increase in the FSCS levy in the nine months to 31 March 2018/19, lifting the total levy to £336 million.
The FSCS also said has received 150 claims against three failed Sipp operators and expects to see many more between 2018/19.
The costs associated with running the scheme will rise by £3.5 million to £72.7 million.
The key driver for this increase is the higher cost of enhancing FSCS resilience as it increases the size of the revolving credit facility.
The FSCS also said it plans to introduce a new single outsource partner to handle the majority of its 2018/19 claims. It expects to announce the partner shortly.
FSCS chief executive Mark Neale (pictured) highlighted how much the organisation has achieved since it launched its five-year vision in 2014.
'Our customer service is much enhanced, thanks to our investments in technology and process,' Neale said.
'We improved our value for money and the transparency of our reporting and there has been significant innovation in how we deliver our service. Awareness of FSCS protection is now at record levels and the legacy of the 2008 banking failures is now mostly resolved.
'FSCS is in a position of greater preparedness for future failures thanks to planning and testing work and we have become a more professional and resilient organisation. We are, in short, in good shape to face the challenges ahead. We very much welcome feedback on our plans for 2018/19./