FSCS (and FOS) Exemption

Referring to the article on the FSCS levy a reminder to firms to ensure that, where applicable, they have submitted exemption forms in respect of FSCS and FOS levies.

A firm can exempt itself from a FOS levy if it does not conduct business with eligible complainants and can benefit from a reduction in the FSCS levy (the base cost levy will still be payable) if it does not conduct business with eligible claimants.

The two types of client are not the same.

A quick rule of thumb, based upon DISP 2.7.9(2), is that eligible complainants will be ‘retail’ whereas, based upon COMP 4.2.2, individuals largely qualify as an eligible claimant.

However this is a simplification and firms should familiarise themselves with DISP 2.7 and COMP 4.

Exemption is by way of completing and submitting the appropriate form to the FCA – see the provided links, including relevant FAQs.

Once an exemption is lodged it is rolled over from year to year meaning that annual submissions are not required.

However it is important to note that firms are required to notify the FCA if an exemption no longer applies.

Firms that are authorised as, or applying to be authorised as, an AIFM should note that, in the case of an eligible complainant, most AIFs are covered by FOS (DISP 2.7.6(3A)) and that, in the case of an eligible claimant, most UK AIFs will be covered by FSCS (COMP 5.5.3).