Cost Structure

Management expenses

These are FSCS's overheads, split between base costs and specific costs.

All firms contribute to the base costs element of the management expenses levy.  Base costs are the costs of running the FSCS, which are not dependent on levels of defaults. Firms generally contribute to the base costs in proportion to the regulatory costs they pay to the PRA and/or FCA.

Specific costs are the costs of assessing claims and making payments, which are dependent on levels of defaults. As with compensation costs, specific costs are allocated to the relevant classes, then allocated to individual firms in accordance with the applicable tariff base.

The management expenses levy is subject to an annual limit, fixed by the PRA and FCA following consultation with industry.