FSCS announces its levy for 2020/21 at £649m
The Financial Services Compensation Scheme (FSCS) has confirmed its levy for 2020/21.
FSCS will levy firms £649m this year, £14m more than was forecast in its Plan and Budget 2020/21 that was published in mid-January. This includes an amount of £74.7m for management expenses which are the costs of running the Scheme.
The main change in the compensation forecast since the indicative levy was announced in the Plan and Budget, is the inclusion of £44m to cover estimated compensation costs for London Capital and Finance (LCF). This will be attributed to the Life Distribution and Investment Intermediation Class. However, savings in other classes (mainly Deposits and General Insurance Distribution) mean that the overall increase from the January indicative levy is £14m.
Whilst FSCS is continuing to see an increase in pension-related claims, FSCS has reduced its forecast outlined in the January Plan and Budget for SIPP operator claims by £7m. This is due to a revision in the anticipated timing and cost of some recent and expected future SIPP operator failures.
Caroline Rainbird, FSCS CEO, said:
“We publish this Outlook during what is an extremely challenging time for everyone, and we appreciate that the impact of COVID-19 is likely to be felt for a considerable period of time. Although the pandemic has altered FSCS’s working practices, it has not impacted on the day to day delivery of our service, and we have continued our business as usual. However, we recognise that business as usual will not be possible for everyone and that some may face challenges due to the current economic situation.
“The overall increase in the FSCS levy since the January forecast partly reflects the ongoing progress we are making in relation to the LCF failure. As we announced earlier this month, we have now started the process of reviewing individual LCF claims relating to misleading advice. Whilst it is too early to say how many LCF customers will be eligible for compensation, for the purpose of the levy we have estimated an amount of £44m.
“We know that the industry has expressed concerns about the rising trends in compensation costs and increased levy amounts. I would like to reassure our levy payers that we are working with the industry and regulators to do as much as we can to address these concerns and will keep our levy payers updated on our progress.”
A full explanation of the 2020/21 annual levy is contained in the latest edition of Outlook, the newsletter FSCS produces for the industry.
Suzette Browne t: 020 7375 8633 / m: 07500 842747
Catherine Goodier t: 020 7375 8631
Anthony Ozimic t: 020 7375 8638 / m: 07939 177683
James Tweed t: 020 7375 8646
Notes for editors
Read more about the remit of FSCS on our Notes for editors page.
Latest News from
FSCS Temporary High Balance coverage extended05/08/2020 12:25:00
The Financial Services Compensation Scheme’s (FSCS) Temporary High Balance (THB) protection for deposits of up to £1m will be temporarily extended from six to 12 months for deposit-taker failures occurring from this Thursday, 6 August 2020.
FSCS adds further strength to its Board with three Non-Executive Director appointments30/07/2020 12:25:00
Mr Marshall Bailey OBE, Chair of the Financial Services Compensation Scheme (FSCS) yesterday announced the appointment of three new Non-Executive Directors to the FSCS Board.
FSCS enables 18,000 SVS Securities clients to have access to their money and assets27/07/2020 12:25:00
Around 18,000 former clients of wealth management firm SVS Securities plc can begin to access their money and assets from the new nominated broker ITI Capital Ltd as of friday (24 July 2020).
FSCS publishes its 2019/20 Annual Report and Class Statements09/07/2020 15:02:00
The Financial Services Compensation Scheme (FSCS) helped over 258,000 customers to get their lives, families and businesses back on track during 2019/20.
Stay safe from scammers06/07/2020 13:48:00
If you've dealt with a financial firm that's failed, then you’re at risk from scammers. But it’s easy to stay scam smart, spot fraudsters and keep safe online when claiming with FSCS.
E-money and prepaid accounts – why doesn’t FSCS protect my money?06/07/2020 10:20:00
E-money (electronic money) isn’t something FSCS protects – read on to find out why and how to check your money is safe.
Fiona Kidy appointed Chief Financial Officer03/07/2020 16:07:00
The Financial Services Compensation Scheme (FSCS) is pleased to announce Fiona Kidy as its newly appointed Chief Financial Officer (CFO) from 1 July, following a competitive recruitment process.
Keeping your money safe11/06/2020 12:25:00
Emma McAllister explains the process and limits of the FSCS protection scheme for banks, building societies and credit unions.