| Link(s): | Our November 2021 Outlook |
Context
FSCS Chief Executive Caroline Rainbird has introduced the FSCS November 2021 Outlook, focusing on the 2021/22 levy and the FSCS forecast for the 2022/23 levy.
Key points to note
- There is some good news the FSCS has confirmed that it will not be raising a supplementary levy for 2021/22.
- This is perhaps putting off the inevitable because the failures expected this year in pensions, investments and IFA areas will likely happen next year.
- FSCS is, therefore, forecasting a supplementary levy for 2022/23.
- Caroline Rainbird, the FSCS CEO, has stated that “We must be clear that we are not yet seeing a long-term fall in compensation costs.”
- In the November 2021 Outlook, the forecast for 2021/22 is £12.9m (own levy £12.9m and supplementary now nil) out of an overall expected amount of now £717m.
- The indicative forecast for 2022/23 is £67.7m (own levy £8.3m and supplementary £59.4m) out of an overall expected amount of £900m.This is still FIVE times what insurance brokers will pay in 2021/22. This is due to other classes breaching their limits and the retail pool expected to be required.
- The 2022/23 fee will be billed in the summer of 2022, although larger payers will be billed 50% on account in March 2022.This will only be the £8.3m levy for the own class.
- The supplementary levy will be billed later, if and when required.
- In the insurer class the costs of the Gefion failure are higher than originally estimated although the Outlook does not confirm any amounts at this stage.
- BIBA has also welcomed the publication of the latest levy requirements but warns that the 2022/23 financial year could be worse than predicted for 2021/22, with several anticipated collapses happening a year later than thought.
Next actions
None – for information and awareness