Context
Martyn Beauchamp, the interim CEO of the FSCS, has provided an update on the FSCS budget.
Key points to note and next actions
The FSCS management expenses forecast for 2023/24 is currently £99.7m, which is £0.2m less than the budget published in January 2023. The reduction is due to FSCS incurring lower claims processing costs than previously anticipated.
It is proposing a management expenses budget of £103.1m for 2024/25, which is an increase of 3% on the 2023/24 budget.
The majority of the budget covers claims-handling costs. It also funds essential work including pursuing recoveries, raising awareness of FSCS protection and investing in its systems to ensure it is fit for the future.
The overall proposed Management Expenses Levy Limit (MELL) is £108.1m, which includes a £5m unlevied reserve on top of the core budget. This reserve is £5m less than last year, having now returned to its pre-pandemic level. In the past three financial years, the reserve was higher due to increased levels of uncertainty around firm failure.
The FCA and the PRA are jointly consulting on our budget, and you can find this consultation on their respective websites. The MELL consultation closes on Monday 12 February, 2024.