Context
The PRA and the FCA set a limit for the total management expenses that the FSCS can levy on financial services firms. The MELL covers the costs of operating the compensation scheme and is the maximum amount the FSCS may levy in a year without further consultation. It does not include compensation costs, which are levied separately and decided by the FSCS.
Key points to note
- The proposed MELL is £110.5 million for 2022/23, consisting of a management expenses budget of £95.5 million and an unlevied contingency reserve of £15 million.
- This is an increase of 5.5% (£5 million) over the 2021/22 management expenses budget of £90.5 million.
- Most of the increase can be attributed to a forecasted rise in the complexity of claims expected to be received by the FSCS, driven by an increase in the expected number of pension claims from FCA-regulated firms.
- The remainder of the increase is due to a £1.5 million rise in controllable costs which have been held flat in real terms after adjusting for inflation at 3%.
- The proposed MELL would apply from Friday 1st April 2022, the start of the FSCS’s financial year, to Friday 31st March 2023.
Next actions
Provided for information and awareness, but the Consultation closes on Monday 14 February 2022. Please send your comments or enquiries to CP1_22@bankofengland.co.uk.