Plan and Budget 2008-09
Sub-class C2 Life & pensions - intermediation |
£32m 2008/09 estimated gross initial funding requirement |
Cost drivers |
Claims relating to mortgage endowments, pensions and other life and pensions claims, plus a share of FSCS management expenses. |
Any credit or debit from previous contribution groups? |
YES - firms in A12, A13 and A16 are expected to share a CREDIT according to their tariff data for 2007/08.* |
What will firms in this Sub-class pay? |
The net amount to be paid by individual firms is the difference between their share of the £32m funding requirement, according to their 2008/09 tariff data, less any credit (if any) in respect of their membership of A12, A13 and A16. |
Based on current claims estimates, intermediary firms in the previous contribution groups A12, A13 and A16 will benefit from a fund balance credit at 31 March 2008. This credit relates, in part, to reduced volumes and costs of mortgage endowment and pensions review claims, and marks the end of the ring-fenced contribution group A16 (IFA pensions review claims).
The A16 balance will be distributed between providers and intermediaries in proportion to their contributions in 2007/08. Pensions review claims will now be allocated to Sub-class C2.
The net amount to be paid by individual firms will depend on tariff data in 2007/08 and 2008/09 as indicated in the table.
Any firms now allocated to Sub-class C2 but not previously in contribution groups A12, A13 and A16, will be levied for their share of the full funding requirement (£32.0m) without any adjustments for credits or debits.
A12 and A13 contribution group fund balances as at 31 March 2008
These balances will be distributed to firms in the respective contribution groups by reference to their 2007/08 tariff data. We estimate the balances to be some £5.1m in A12 and £16.3m in A13, due mainly to lower than expected mortgage endowments volumes and costs. Most firms should therefore expect credit notes to offset 2008/09 funding requirements.
It would be misleading to try to map these balances against the new Sub-classes here, as there is no exact correlation between old groups and new Sub-classes. However, firms now in A12 or A13 will receive their full entitlement to any refund which will defray any liabilities in C2 or D2.
* Firms will only receive credit or debit notes from previous contribution groups if they were a member of a previous contribution group from 1 April 2007. Details of the transition rules are available from the FSA (PS07/19, FSCS Funding Review - Feedback on CP07/5 and made text).
