FSCS confirms £247m levy for 2026/27, with no additional levy expected
The Financial Services Compensation Scheme (FSCS) has today published its latest Outlook, confirming that its levy forecast for 2026/27 remains unchanged at £247m, with no additional levy anticipated this year.
FSCS now expects to recover £43m from failed firms and relevant third parties by the end of 2026/27, £10m more than had been forecast in May. The majority of recoveries will be used to offset the levy, reducing the amount firms need to pay. This, alongside effective use of available surpluses and disciplined cost management, has helped maintain the levy position.
Compensation costs for 2026/27 are now anticipated at £292m, an increase of £25m since May’s Outlook, driven by higher-than-expected average payments across a number of claim types. This includes claims relating to investment advice, self-invested personal pensions (SIPPs) and insurance. Higher Special Administration Regime costs have also contributed to the increase.
FSCS has also today provided an early indication of the 2027/28 levy, currently forecast at £360m, to help firms with their financial planning. The forecast increase on 2026/27 is principally due to lower surplus balances being available to offset the levy, with no significant change in compensation costs expected.
As previously signalled, FSCS has continued to use available surpluses efficiently to reduce the amount firms need to pay. By the end of 2026/27, total surplus balances will have been largely utilised and are projected to be over £100m lower than at the end of 2025/26.
Compensation for 2027/28 is currently anticipated to remain broadly similar to 2026/27, reflecting a mix of SIPP advice, general investment and insurance-related claims.
Martyn Beauchamp, FSCS Chief Executive, said:
“Maximising recoveries, maintaining strong cost discipline and driving operational efficiencies remain key to delivering value for the industry. We now expect to recover £43m by the end of the financial year, 30% more than anticipated in May, helping to offset levy requirements as available surplus balances reduce.
“Alongside delivering value for industry, our protection plays an important role in building confidence in financial services. Nine in 10 consumers who are aware of FSCS say our protection makes them more confident about taking out a product with an FSCS-protected provider, while 86% say it increases their trust in the sector. ¹
“With 25 years of protecting consumers behind us, our role in maintaining confidence in financial services remains as important as ever. As we reach a full year of operating with the increased £120,000 deposit protection limit, our focus remains firmly on the future: being ready when customers need us, managing costs responsibly for industry, and providing the protection that underpins confidence in UK financial services.”
¹ Source: FSCS/2CV Brand Tracking Survey, May 2026. UK adults aged 18+ (base: 2,024).
FSCS now expects to recover £43m from failed firms and relevant third parties by the end of 2026/27, £10m more than had been forecast in May. The majority of recoveries will be used to offset the levy, reducing the amount firms need to pay. This, alongside effective use of available surpluses and disciplined cost management, has helped maintain the levy position.
Compensation costs for 2026/27 are now anticipated at £292m, an increase of £25m since May’s Outlook, driven by higher-than-expected average payments across a number of claim types. This includes claims relating to investment advice, self-invested personal pensions (SIPPs) and insurance. Higher Special Administration Regime costs have also contributed to the increase.
FSCS has also today provided an early indication of the 2027/28 levy, currently forecast at £360m, to help firms with their financial planning. The forecast increase on 2026/27 is principally due to lower surplus balances being available to offset the levy, with no significant change in compensation costs expected.
As previously signalled, FSCS has continued to use available surpluses efficiently to reduce the amount firms need to pay. By the end of 2026/27, total surplus balances will have been largely utilised and are projected to be over £100m lower than at the end of 2025/26.
Compensation for 2027/28 is currently anticipated to remain broadly similar to 2026/27, reflecting a mix of SIPP advice, general investment and insurance-related claims.
Martyn Beauchamp, FSCS Chief Executive, said:
“Maximising recoveries, maintaining strong cost discipline and driving operational efficiencies remain key to delivering value for the industry. We now expect to recover £43m by the end of the financial year, 30% more than anticipated in May, helping to offset levy requirements as available surplus balances reduce.
“Alongside delivering value for industry, our protection plays an important role in building confidence in financial services. Nine in 10 consumers who are aware of FSCS say our protection makes them more confident about taking out a product with an FSCS-protected provider, while 86% say it increases their trust in the sector. ¹
“With 25 years of protecting consumers behind us, our role in maintaining confidence in financial services remains as important as ever. As we reach a full year of operating with the increased £120,000 deposit protection limit, our focus remains firmly on the future: being ready when customers need us, managing costs responsibly for industry, and providing the protection that underpins confidence in UK financial services.”
¹ Source: FSCS/2CV Brand Tracking Survey, May 2026. UK adults aged 18+ (base: 2,024).
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