FSCS announces its final levy for 2016/17 at £337m

26th April 2016

The Financial Services Compensation Scheme (FSCS) has announced its levy for 2016/17.

FSCS will levy £337m in this financial year, £26m less than forecast in its Plan and Budget for 2016/17, published in January. The levy in 2015/16 totalled £319m.

Management expenses fall for the second successive year. In 2016/17, these will total £67.4m.

Most industry sectors will contribute less in 2016/17 than FSCS forecast in January. The exception is the life and pensions intermediaries sector, which will pay a levy of £90m in 2016/17 – up from a forecast of £80m, to reflect a higher average cost of claims arising from advice about investments in self-invested personal pensions (SIPPs). In 2015/16, life and pensions intermediaries paid a levy of 100m.

In addition to the overall levy, FSCS will recover interest costs – also £337m – from Treasury loans for Bradford and Bingley and Kaupthing Singer & Friedlander during the banking crisis in 2008.

Mark Neale, Chief Executive of FSCS, said: “The annual levy allows us to compensate customers. That generates consumer confidence and trust in the industry.

“We look forward to the forthcoming review by the Financial Conduct Authority into how FSCS is funded, and will play our part in discussions. I encourage the industry to play a full role in the debate.”

Since FSCS was created in 2001, more than 4.5m people have received in excess of £26bn in compensation claims against the financial services industry.”

A full explanation of the 2016/17 annual levy is contained in the latest edition of Outlook, the newsletter FSCS produces for the industry.

 

Funding Classes

2016/17

Final Levy

£m

2016/17 Indicative Levy £m

Variance

 

£m

Deposits (SA01)

24

28

(4)

General Insurance Provision (SB01)

91

94

(3)

General Insurance Intermediation (SB02)

8

19

(11)

Life & Pensions Provision (SC01)

-

-

-

Life & Pensions Intermediation (SC02)

90

80

10

Investment Provision (SD01)

2

2

-

Investment Intermediation (SD02)

94

108

(14)

Home Finance Intermediation (SE02)

6

10

(4)

Base Costs

22

22

(0)

Total

337

363

(26)

About the FSCS

The Financial Services Compensation Scheme (FSCS) is the UK’s statutory compensation scheme for customers of authorized financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA), and funded by a levy on authorized financial services firms. FSCS does not charge individual consumers for using its service. For more information visit www.fscs.org.uk

Jargon Buster

  • Deposits

    money placed in a bank or similar institution to earn interest or for safe-keeping.
  • FSMA

    Financial Services and Markets Act 2000, an Act of Parliament governing the regulation and provision of financial products, product providers and financial advisers.
  • Investment

    a financial product in which money can be invested to earn interest or profit (although the value of investments can go down as well as up).