UK FSCS Levy Forecast Unchanged

On Nov. 24, UK FSCS confirmed £625mn, plus 2023/24 early forecast.

  • UK FSCS's latest edition of Outlook confirmed 2022/23 levy forecast is £625mn, with no additional levy expected this financial year; initial 2023/24 levy forecast is £478mn.
  • Follows UK FSCS May 2022, £625mn forecast/report on compensation, see #138880.
  • Summary
  • Lower 2023/24 forecast is due to anticipated surpluses including £91mn investment provision class, self-invested personal pension operator claims now expected 2023/24.
  • Also £86mn life distribution/investment intermediation, with fewer complex claims.
  • All surpluses are carried forward/used to offset 2023/24 levy at financial year end.
  • Expects to pay £592mn compensation in 2023/24; around £517mn total in 2022/23.
  • Claims on already failed firms account for 80% of 2023/24 anticipated compensation costs; remaining 20% for compensation against firms expected to fail in 2023/24.
  • Compensation expected to remain high due to: ongoing complex claims in areas such as pension advice and general insurance; lag between harm/FSCS receiving claims.
  • Around 80% needing to bring claims to FSCS did not realize until at least 5 years after.
  • Next Steps
  • UK FSCS will issue updated 2023/24 levy assumptions in the spring 2023 Outlook.

Regulators UK FSCS
Entity Types B/D; Bank; BS; CU; IA; IB; Ins; Inv Co; MG Orig; Pension; Servicer
Reference PR, 11/24/2022
Functions BCS; Complaints; Compliance; Financial; Resolution; Risk; Treasury
Countries United Kingdom
Category National Regulator
Products Banking; Deposits; Fund Mgt; Insurance; Loan; Mortgage; Pensions; Securities
Regions EMEA
Rule Type Guidance
Rule Date 11/24/2022
Effective Date 11/24/2022
Rule Id 154311
Linked to N/A
Reg. Last Update 11/24/2022
Report Section UK

Last substantive update on 11/24/2022