Context
The FCA has announced that it has published, jointly with the PRA, the FSCS Management Expenses Levy Limit (MELL) 2026/27 Consultation Paper. For the FCA, this is CP26/2, and for the PRA it is CP1/26. The Consultation is accompanied by a series of Appendices contained in a separate document. The MELL is a limit on the total management expenses that the FSCS can levy financial services firms. The MELL covers the FSCS’s ongoing operating costs and includes the FSCS’s IT, staff, legal and outsourced and internal claims’ handling costs. It does not include compensation costs, which are levied separately and decided by the FSCS. The proposed MELL would apply from 1 April 2026 until 31 March 2027.
Key points to note and next actions
- The proposed MELL is £113m for 2026/27, consisting of a management expenses budget of £108 million and an unlevied reserve of £5 million. The budget of £108 million represents an increase of £4.4 million from 2025/26, which is broadly in line with inflation.
- Section 4 of the Appendices document contains sectoral information in relation to the allocation of the MELL, showing the allocation to General Insurance Distribution of £0.9m, which is a £0.3m reduction compared to 2025/26 (a 28% drop).
- Please send any comments on the proposed MELL by e-mail, or alternatively in writing to: David Lamb, Prudential Regulation Authority, 20 Moorgate, London, EC2R 6DA. The PRA is accepting responses on behalf of both the FCA and the PRA. Any responses will be considered by both authorities and shared anonymously with the FSCS.
- Following consideration of the responses, the PRA proposes to issue a policy statement (PS) and the FCA proposes to 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 2026.