Financial Services Compensation Scheme – Management Expenses Levy Limit 2020/21

Consultation Paper 1/20
Published on 15 January 2020


In this Consultation Paper (CP), the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) set out proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2020/21. This CP is supported by the publication of the FSCS’s Plan and Budget for 2020/21.

This CP 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 contribute to part of the FSCS levies. However, an efficient and adequately funded compensation scheme is beneficial to all consumers.

Summary of the proposal

The proposed MELL is £83.2 million for 2020/21, consisting of a management expenses budget of £78.2 million and an unlevied contingency reserve of £5 million. The proposed MELL would apply from Wednesday 1 April 2020, the start of the FSCS’s financial year, to Wednesday 31 March 2021. 

Responses and next steps

This consultation closes on Monday 17 February 2020. The PRA and the FCA invite feedback on the proposed MELL set out in this consultation. Please address any comments or enquiries to The PRA is accepting responses on behalf of both the PRA and the FCA, and responses will be considered by both authorities.

Following consideration of responses, the PRA will issue a Policy Statement and the FCA will issue a Handbook Notice so that the final rules can be in place for the start of the FSCS’s financial year on Wednesday 1 April 2020. 

The proposals set out in this CP have been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.

In the event that the UK leaves the EU with no implementation period in place, the PRA has assessed that the proposals would not need to be amended under the EU (Withdrawal) Act 2018 (EUWA). Please see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’ for further details. 

PDFConsultation Paper 1/20

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