| Link(s): | FSCS confirms latest 2023/24 levy forecast of £270m FSCS Our May 2023 Outlook FSCS FSCS Outlook May 2023 |
Context
The FSCS has published its latest Outlook update, with revised compensation and levy forecasts for 2023/24. In November’s Outlook, FSCS published an early levy forecast for 2023/24. This forecast considered past trends, the anticipated impact of firms that have already failed, and projections based on when future failures were expected.
Key points to note
The levy forecast for 2023/24 has been revised to £270m. Whilst this is a reduction from the initial estimates shared in November 2022, the FSCS still expect to pay £471m in compensation during 2023/2024 – the sixth year in a row that compensation costs are close to or above £500m.
The 2023/24 forecast levy has reduced due to:
For the General Insurance Distribution class specifically, the levy has decreased from the £5m forecast in the indicative levy to nil, with the year end surplus from 2022/23 expected to cover the costs for the 2023/24 financial year. The FSCS is not expecting any new firm failures in 2023/24 for the GI Distribution class.
Caroline Rainbird, Chief Executive of FSCS, said: “The levy enables FSCS to continue to provide a trusted compensation service that helps build confidence in the financial services industry, particularly during economic and market volatility. Whilst the level of compensation expected this year is lower than it has been in some recent years, this is the sixth year in a row that compensation costs are close to or above £500m.”
“We will continue to closely monitor the volume and complexity of claims throughout the year and will share our next update on the levy in the autumn edition of Outlook.“
Next actions
None – for information and awareness.