FSCS 2026/27 budget delivers efficiency and readiness
- FSCS announces 2026/27 budget will be in line with inflation
- FSCS also confirms 2025/26 budget remains unchanged
Today, FSCS publishes its Budget Update, outlining management expenses for 2026/27 of £108m. This includes £97m in core costs, a 6% reduction on the previous year, plus an additional £11m to enhance FSCS’s existing revolving credit facility (RCF), enabling greater funding readiness and helping to strengthen confidence in the UK’s financial services industry. Including the additional RCF costs, FSCS’s total budget for 2026/27 remains in line with inflation.
The FSCS management expenses ensure the scheme fulfils its statutory duties including getting customers back on track quickly when firms fail and pursuing recoveries to help reduce levies for firms. By focussing on streamlined processes and responsible cost management, FSCS delivers these responsibilities as efficiently as possible.
Following recent regulatory developments, including the Bank Resolution (Recapitalisation) Act and an increase to the deposit protection limit, FSCS is working closely with HM Treasury and the Bank of England to raise its current RCF. This includes a projected uplift to the RCF from £1.45bn to £3bn. This will ensure that FSCS can continue paying compensation quickly, as well as provide sufficient funds to the Bank of England to enable the speedy resolution of a failing deposit taking institution.
The enhanced RCF will also help better protect public funds if a major default occurs, supporting the stability of the UK’s financial services sector. Budget efficiencies will offset the majority of the additional costs of the enhanced RCF. As a result, FSCS will keep overall costs broadly aligned with inflation.
The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are consulting on an overall 2026/27 Management Expenses Levy Limit of £113m, which represents an inflationary only increase on 2025/26 of £4.4m. It also includes an unlevied contingency reserve of £5m, which is unchanged from 2025/26.
The latest forecast for 2025/26 remains at £108.6m, including an unlevied reserve of £5m, as announced in January 2025. We do not anticipate invoicing firms for the 2025/26 unlevied reserve.
Martyn Beauchamp, Chief Executive of FSCS, said:
“As a responsible steward of levy payer funds, we’re committed to delivering savings wherever possible. By driving operational efficiencies, we’ve absorbed much of the stated rise in management expenses, keeping the proposed 2026/27 budget aligned with inflation. Excluding the additional RCF costs, our budget is down 6% on 2025/26, and 11% in real terms.
“At the same time as carefully managing our costs, we’re investing in resilience to ensure we can continue to manage failures effectively and respond to evolving industry and customer needs.
“Our ability to compensate customers swiftly and support the Bank of England to recapitalise failing deposit firms through the enhanced revolving credit facility, reinforces confidence in financial services. It underscores FSCS’s vital role in maintaining financial stability and keeping the UK a secure, trusted place to do business.”
For full details, visit the FSCS Budget Update webpage.
The PRA and FCA are consulting on the FSCS 2026/27 budget as part of the MELL consultation. The consultation closes on Tuesday 10 February 2026.
Media enquiries
Email: publicrelations@fscs.org.uk
Contact: Farah Baldock, 07730 668 558.