FSCS Levy 2016/17

Of Relevance to:
All firms

FSCS Levy 2016/17

Separate to Consultation Paper CP16/9 “FCA Regulated fees and levies: Rate proposals 2016/17” (see previous article) the Financial Services Compensation Scheme (“FSCS”) has announced its 2016/17 levy.

Although of most interest to those firms that conduct business with eligible claimants (see COMP 4.2), all firms remain liable for a share of the base cost levy.

The FCSC levy for this year is set at £337m (£319m 2015/16), although this does not include the levy – also £337m – on banks, building societies and credit unions representing the interest costs relating to the loan from HM Treasury arising from the 2008 banking crisis.

As for future levies, the Financial Advice Market Review (“FAMR” – see Regulatory Roundup 74) has recommended that the FCA’s next FSCS funding review looks at three possible reforms:

  • levying the FSCS’s compensation costs across a broader range of pools than the current funding classes.
  • reducing volatility in the levies through long-term borrowing to smooth the impact of major failures such as Keydata.
  • introducing risk weighting so that higher risk businesses make a proportionately higher levy contribution.