FSCS announces its final levy for 2017/18 at £363m
The Financial Services Compensation Scheme (FSCS) has announced its levy for 2017/18.
FSCS will levy firms £363m this year, £15m less than it forecast in its Plan and Budget 2017/18 in January. This includes management expenses of £69.2m.The levy in 2016/17 totaled £337m.
The final levy is broadly in line with the indicative forecast FSCS published in January.
Although the levy on life and pensions advisers remains unchanged at £100m, FSCS’s forecast of compensation costs remains above this at £146m – down from its earlier forecast of £163m. FSCS will keep this under review and, if needed, will raise a supplementary levy later in the year to cover compensation costs above the £100m limit.
General insurance intermediaries will pay £5m more, and investment intermediaries £4m more than FSCS forecast in January.
Better claims data from brokers in relation to the failure of Enterprise Insurance is the main reason for the reduction in FSCS’s compensation forecast for general insurance providers for the 2016/17 levy year. FSCS will have a £23m surplus in the general insurance provision sector at the end of the 2016/17 levy year (30 June 2017). It will offset this surplus against compensation costs for this sector in the 2017/18 levy year, along with expected recoveries of £86m.
Mark Neale, Chief Executive of FSCS, said: “FSCS exists to help people with nowhere else to turn when financial services firms fail. We protect thousands of people every year and provide compensation which the industry funds. This helps to generate consumer confidence.
“Although the indicative forecasts we published in January and our final levy numbers this year are broadly similar, firms know that our levies can be unpredictable owing to the nature of some failures and the claims they generate. We welcome the continued support of levy payers at this time. We know that many are also engaged in the ongoing FCA review of the FSCS funding model, and encourage a full debate to settle the basis of FSCS funding for the foreseeable future”
A full explanation of the 2017/18 annual levy is contained in the latest edition of Outlook, the newsletter FSCS produces for the industry.