FSCS announces 2011/12 levy
6th April 2011
The FSCS has set the annual levy for 2011/12 at £217m.
Following the publication of the Plan and Budget 2011/12 in February, the FSCS refined its compensation and claims projections for the coming year in the light of the latest trends over recent months, and reduced the levy by £23m.
Compared to the indicative levy amounts announced in the Plan and Budget, with the exception of the Life and Pensions Intermediation sector, the proposed levy for each part of the industry either remains unchanged, or has been reduced. The base costs levy of £34m announced in the Plan and Budget (which is included in the £217m) also remains unchanged.
The FSCS has confirmed that, in relation to the interim levy announced in January, any recoveries it makes in respect of claims against investment intermediaries paid in the 2010/11 levy year will first be credited to the Investment Fund Managers in order to repay the cross-subsidy triggered by last year’s interim levy of £326 million. As the costs of pursuing recoveries are management expenses, they will be funded by Investment Intermediaries, but the costs of recoveries will be met from the proceeds before any funds are paid to the fund management sector. This is in accordance with the FSA FEES rules, which were introduced as part of the changes to our Funding Model in 2008.
FSCS Chief Executive, Mark Neale, said: “We are pleased to announce a levy that is £23m less than originally projected, firms and trade bodies have emphasised to us the impact our levies have on the businesses that must pay them. In particular, we are mindful of the fact that, in addition to this levy, investment firms will have received their bills in respect of the interim levy we announced in January. I want to assure all of our levy payers that we only raise funds that we expect to require and that we pursue recoveries against third parties whenever it is reasonably possible and cost effective for us to do so. These recoveries will be used to help offset the costs of compensating consumers when firms fail.”
- Find out the full details of the FSCS levy in issue 26 of Outlook.
- Read the full statement of the FSCS’s treatment of recoveries arising from the 2010/11 compensation costs levy for the investment funding class.