FSCS announces 2024/25 proposed management expenses budget of £103.1m
Today, FSCS publishes its Budget Update which outlines its proposed 2024/25 management expenses.
To ensure FSCS’s service is fully funded, and can compensate customers as efficiently as possible, FSCS is forecasting a 2024/25 management expenses budget of £103.1m.
The total levy for 2024/25, which includes both FSCS’s management expenses and estimated compensation payments, remains as forecast in November’s Outlook.
The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) are consulting on an overall 2024/25 Management Expenses Levy Limit of £108.1m. This includes a core budget of £103.1m and an unlevied reserve of £5m. This reserve, which is £5m less than proposed in January 2023, has now returned to its pre-pandemic levels. In the previous three financial years, the reserve was higher due to elevated levels of uncertainty around firm failure.
Management expenses update for 2023/24Information regarding FSCS’s latest 2023/24 management expenses was also published today. The forecast for the current year now stands at £99.7m. This is approximately £0.2m less than expected when FSCS first announced the budget in January 2023.
Any surplus budget (approximately £0.2m) at the end of the financial year will be used to offset the 2024/25 levy. This surplus will be factored into FSCS’s spring Outlook update which will include the latest levy forecast.
For more information on the FSCS 2023/24 and 2024/25 management expenses, please see the FSCS Budget Update webpage.
Martyn Beauchamp, Interim Chief Executive of FSCS, said:
“Complex claims and enquiries now make up the majority of FSCS’s work. To ensure we’re best positioned to handle these claims, we’ve made a strategic decision to increase our in-house expertise going forward. This transition is a key focus for us and will mean additional costs during 2024/25.
“We’ve partially offset the costs of this work through savings across the business, by carefully prioritising and making efficiencies where possible. Overall, this has meant a forecast rise in our management expenses of 3%, which is below the level of inflation.
“We expect to pay a significant amount in compensation during the next year, helping our customers get back on track as soon as possible and directly contributing to public confidence in the UK financial services industry.”
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