FSCS announces its annual Plan and Budget 2020/21
Compensation scheme announces indicative levy of £635m and management expenses budget of £78.2m for 2020/21 in its Plan & Budget
FSCS to raise supplementary levies on financial services firms in 2019/20
The Financial Services Compensation Scheme (FSCS) today publishes its Plan and Budget for 2020/21. The document outlines expected management costs and the latest forecast of potential claims volumes. Also outlined are initial forecasts for the levy financial services firms will pay next year, as well as a supplementary levy due to be raised on firms before the end of 2019/20.
FSCS needs to raise a supplementary levy for 2019/20, of £50m from the Life Distribution, Pensions and Investment Intermediation class. The main cause for this supplementary levy is increased claims volumes and new defaults. FSCS will also provide a refund of £30m to firms in the Deposits class. (A full breakdown is provided in the table in Notes for Editors below).
The proposed 2020/21 indicative levy is £635m, an increase of £87m from the levies raised
in 2019/20. The overall increase is due to a rise in SIPP operator claims, which is consistent with the trend FSCS has seen in recent years. FSCS expects the investment provider class to reach its annual limit as a result of these latest levy predictions, which will trigger the retail pool.
The total management expenses budget (i.e. the cost of running FSCS and of paying claims) will be £78.2m, a 1.3% increase on the latest full-year forecast for 2019/20 of £77.2m, and an increase of £3.6m (4.8%) compared to the 2019/20 budget. The key drivers for this increase are the costs of core support and making recoveries.
Caroline Rainbird said:
“I am delighted to introduce my first Plan and Budget as FSCS Chief Executive. The past eight months since joining FSCS have left me very impressed by its strength as an efficient and effective compensation scheme, delivering an empathetic service for consumers, many of whom are vulnerable. We are able to do this by working in partnership with the financial services industry and the regulatory family.
“As well as detailing our levies, budgets and forecasts, today’s Plan and Budget also sets out progress that has been made on our Strategy for the 2020s based on the four pillars of Prepare, Protect, Promote and Prevent.
“FSCS expects to face a number of challenges in the coming year including continuing vulnerability of customers, a higher number of firm failures and a growing number of complex claims. I am confident that FSCS’s Plan and Budget for 2020/21 provides FSCS with the resources and strength it will need to meet these demands in the interests of all our stakeholders.”
The Plan and Budget 2020/21 is available on the FSCS website. FSCS will confirm the final levy in April 2020.
FSCS protects consumers when authorised financial services firms fail. It has come to the aid of more than 4.5m people, paying out more than £26bn since 2001.
Suzette Browne / T: 020 7375 8633
Anthony Ozimic / T: 020 7375 8638
James Tweed / T: 020 7375 8646
Catherine Goodier / T: 020 7375 8631
Notes to editors
Read more about the remit of FSCS on our Notes for editors page.
Latest News from
FSCS clarification – July 2019 monthly defaults press release - Assura Protect Ltd27/01/2020 16:20:00
FSCS wishes to clarify that Assura Protect Limited of 86 Gloucester Place, London W1U 6HP has not been declared in default by FSCS and we understand is still trading and remains Authorised under FRN 678817 by the Financial Conduct Authority.
Quick Sure Insurance Company Ltd has failed27/01/2020 13:48:00
Quick Sure Insurance Ltd, a Gibraltar-based insurance company, was declared in default recently (Friday 24 January 2020) by the Financial Services Compensation Scheme (FSCS).
Plan and Budget20/01/2020 12:25:00
FSCS Plan and Budget outlines expected management costs and the latest forecast of potential claims volumes. Also outlined are initial forecasts for the levy financial services firms will pay next year, as well as any supplementary levy that may be due.
FSCS announces decision on LCF claims09/01/2020 13:25:00
The Financial Services Compensation Scheme (FSCS) today announces key decisions for claims in relation to the London Capital and Finance (LCF) failure.
Mail Online, This is Money & FSCS06/01/2020 14:10:00
FSCS, the Mail Online and This is Money have joined forces to produce a series of podcasts and articles. They all have one purpose – to help you keep your money safe.
North Airdrie Credit Union Ltd fails18/12/2019 13:47:00
The Financial Services Compensation Scheme (FSCS) has stepped in to protect the members of North Airdrie Credit Union Ltd, which has stopped trading and is now in default.
FSCS Outlook December 201917/12/2019 12:10:00
Welcome to the latest edition of Outlook where we discuss updates that have taken place since we published the previous edition in April this year.
Elite Insurance Company Ltd fails12/12/2019 16:20:00
Gibraltar-based Elite Insurance Company Ltd was placed in administration on 11 December 2019 and is no longer paying claims.