This Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) consultation paper (CP) sets out proposals for the management expenses levy limit (MELL) for the Financial Services Compensation Scheme (FSCS).
This consultation is relevant to all PRA and FCA authorised firms, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. As costs may be passed on to consumers in the form of higher prices, consumers may indirectly meet a part of the FSCS levies. However, an efficient and adequately funded compensation scheme is beneficial to all consumers.
Summary of proposals
The MELL is the maximum amount which the FSCS may levy in a year without further consultation, and is proposed to be £77.7 million for 2018/19. This includes a management expenses budget of £72.7 million and an unlevied contingency reserve of £5 million. The proposed MELL limit of £77.7 million would apply from 1 April 2018, the start of the FSCS’ financial year, to 31 March 2019.
Responses and next steps
This consultation closed on Friday 16 February 2018. The PRA and the FCA invite feedback on the proposed MELL set out in this consultation. Please address any comments or enquiries to CP3_18@bankofengland.co.uk.The PRA is accepting responses on behalf of both the PRA and the FCA, and responses will be considered by both authorities.
Following this consultation, the PRA and the FCA will issue respective policy statements or equivalent Handbook notices (as appropriate) so that the final rules can be in place for the start of the FSCS’ financial year on 1 April 2018.