Outlook November 2022
Here we provide the latest levy update for 2022/23 as well as a first look at the 2023/24 forecast.
This information is accompanied by a message from our Chief Executive, Caroline Rainbird and a video with three of our Executive Team.
- The 2022/23 levy forecast remains at £625m
- The initial forecast for 2023/24 is £478m
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Full Outlook report
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The 2022/23 levy forecast remains at £625m
The total levy remains as forecast earlier this year and no additional levy is currently expected. It includes more than £6m that we expect to recoup from failed firms, as part of our recoveries work.
Any surpluses remaining in each class, at the end of the financial year, will be carried forward and used to offset the 2023/24 levy as well as future costs. Currently, this includes:
- £91m in the Investment Provision class, mainly due to self-invested personal pension (SIPP) operator claims now expected in 2023/24;
- £86m in the Life Distribution and Investment Intermediation class, mainly due to fewer claims processed than anticipated for complex pension claims; and
- £26m across all other classes.
For more information, please see the individual class statements below.
The initial forecast for the 2023/24 levy is £478m
This figure is an early indication and is subject to change. It’s based on expected compensation payments totalling £592m in 2023/24 including:
- £497m for firms that have already failed; and
- £95m for firms forecast to fail during 2023/24.
Whilst we are expecting to pay more compensation in 2023/24, the indicative levy is lower than in the current financial year due to expected surpluses being carried over.
This early estimate does not include compensation costs where there is relative uncertainty about when the claims will come through to us. This includes, for example, claims against firms that may fail following the proposed British Steel Pension consumer redress scheme. The Financial Conduct Authority (FCA) will confirm if they will implement a scheme by the end of the year.
We continue to monitor our forecasting closely and will keep levy payers informed of any developments that may impact the levy. Further updates will also be provided in the spring 2023 Outlook.
The current indicative levy for 2023/24 includes an approximate amount for our management expenses, which includes FSCS’s day-to-day running costs, as well as costs associated with processing claims.
Further details will be provided when the Prudential Regulation Authority (PRA) and FCA carry out a public consultation on our management expenses in January 2023.
Payment on account
March 2023 – We’ll invoice the largest 1,000 levy payers an advance payment (50%). This ensures we have enough funds to pay compensation and meet our running costs for the coming year.