This Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) Consultation Paper (CP) sets out proposals for the management expenses levy limit (MELL) for the Financial Services Compensation Scheme for 2019/20.
This document is relevant to all FCA and PRA authorised firms. It is not directly relevant to retail financial services consumers or consumer groups and they do not need to act upon it.
Summary of proposals
The proposed MELL for 2019/20 is £79.6 million and consists of:
- FSCS management expenses of £74.6 million
- an unlevied contingency reserve of £5.0 million
The MELL for 2019/20 is an increase of 2.4% from the 2018/19 MELL of £77.7 million, which is roughly in line with inflation. The rise in budget reflects a projected increase in volumes across pension/self-invested personal pension (SIPP) claims, forecast to cost £3.9 million. The increase is expected to be offset by FSCS cost efficiencies. £53.1 million, or 71% of the total budget, covers claims handling which is the FSCS’ core function. More details on the MELL and how it is calculated can be found in Chapter 2 of the CP.
Response and next steps
Please send any comments on the proposed MELL by 28 February 2019. Please use the online response form on the FCA’s website or write to the FCA at the address on page 2. The FCA is accepting responses on behalf of both the FCA and the PRA, and responses will be considered by both authorities.
Following consideration of responses, the FCA will issue a Handbook notice and the PRA a policy statement so that the final rules can be in place for the start of the FSCS’ financial year on 1 April 2019.