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Home > Prudential Regulation Authority > Financial Services Compensation Scheme – Management Expenses Levy Limit 2017/18 – CP1/17
 

Financial Services Compensation Scheme – Management Expenses Levy Limit 2017/18 – CP1/17

16 January 2017

​Background

This Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) consultation paper (CP) sets out the consultation on the management expenses levy limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2017/18. The MELL being consulted on for 2017/18 is £74.54 million.

The MELL is the maximum amount which the FSCS may levy in a year without further consultation. This covers the projected costs of operating the scheme (£69.24 million), excluding claimants’ compensation costs, and an unlevied contingency reserve (£5.3 million).
 
The MELL provides the FSCS with adequate resources to process compensation claims resulting from the failure of financial services firms. These functions are conferred on it by Part XV of the Financial Services and Markets Act 2000 (FSMA). The MELL is consulted on annually, jointly by the FCA and the PRA.
 
The consultation is relevant to all FCA and PRA authorised firms.
 
Summary of proposals
 
The proposed MELL for 2017/18 is £74.54 million, consisting of:
 
  1. FSCS management expenses of £69.24 million; and
  2. a contingency reserve of £5.3 million.
 
The total MELL of £74.54 million is, therefore, the maximum amount that the FSCS may levy in the year without further formal consultation by the FCA and the PRA.
 
The proposed rules for the FCA and the PRA to set the MELL for 2017/18 are in Appendices 1 and 2 respectively.
 
Responses
 
This consultation closed on Monday 13 February 2017.
 
Please send comments on this CP using the form on the FCA’s website.
 
The PRA and the FCA will consider the feedback and will finalise and publish rules in a policy statement in March 2017. The finalised rules will take effect on 1 April 2017 and invoices will be sent out from July 2017.
 
Consultation paper
 
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