| Link(s): | FSCS confirms unchanged 2024/25 levy | FSCS Interim Chief Executive’s statement | FSCS Outlook November 2024 | FSCS FSCS Outlook November 2024 |
Context
FSCS has published its November 2024 Outlook, in which Interim Chief Executive, Martyn Beauchamp has set out an update on compensation figures and the associated levy for 2024/25 and share a first look at the forecast for 2025/26. The levy for the 2024/25 financial year remains as previously forecast in May 2024 at £265m, and no additional levy is expected for the remainder of the current financial year.
Key points to note and next actions
For the General Insurance Distribution class, the total 2024/25 levy will remain at zero. The forecast 2025/26 levy is also zero.
In 2025/26 FSCS is expecting to pay similar amounts of compensation as 2024/25, at £367m compared to £372m in 2024/25. However, the levy is forecast to be higher than this year at £394m as far lower surpluses will be taken forward. The key drivers behind this forecast include:
- As highlighted in previous Outlook forecasts, due to significantly reduced surpluses being carried forward, funding classes will start with lower opening balances.
- Increased compensation costs in relation to self-invested personal pension (SIPP) operator claims.
- Increased claims decision volumes following the introduction of FSCS’s new operating model, having taken the strategic decision to bring the majority of claims management in-house. This will be fully embedded in 2025/26.