3rd July 2013
In response to feedback received during the consultation on the recent review of the FSCS’ funding, carried out by the FSA, FSCS has drafted two papers. The first outlines FSCS’ approach to raising levies, borrowing and its funding more generally and the second is the approach FSCS is intending to take to calculate expected 36 month compensation costs.
The paper on FSCS’ funding policy outlines FSCS’ approach as to how FSCS exercises its funding powers and discretions. The policy explains to levypayers FSCS’ current and expected future application of the rules around levying, borrowing and recoveries.
The new funding arrangements will allow FSCS to raise a levy for the compensation costs it expects to incur in the 12 months following the date of the levy or, if greater, one third of the compensation costs it expects to incur in the 36 months following the date of the levy (save for the deposit taking class). This rule comes into force on 1 April 2014 and will apply to firms authorised by both new regulators, the FCA and the PRA (the bodies that replaced the FSA with effect from 1 April 2013).
FSCS has been considering how it will apply this rule and is keen to engage with the industry in relation to the approach to calculating the expected 36 month compensation costs. FSCS is publishing a paper setting out the proposed approach and invites responses from the industry and other stakeholders to the paper and in particular to two questions:
1. What are your views of the FSCS’ preferred approach?
2. Are there any other approaches that FSCS should consider?
Please send any feedback on this paper to Sarah McShane – firstname.lastname@example.org by Wednesday 31 July 2013.