Context
The FSCS has published the November edition of its industry newsletter, Outlook, containing the latest news and a levy update.
Firms authorised by the FCA and PRA contribute towards an annual levy which funds the cost of running the service and the compensation which the FSCS pays out to customers of failed firms.
Key points to note
- It is estimated that an additional £92m of funding will be required which will be paid via the supplementary levy
- The supplementary levy is as a result of increased compensation pay outs to customers as a result of an increasing number of firms failing and pension advice claims
- FSCS Chief Executive, Caroline Rainbird, stated: “We only raise a supplementary levy when we absolutely have to, when we estimate that we will not have sufficient funds to meet rising compensation costs or management expenses for the period until the next levy is due”
- There has been a 19% increase in PPI claims which has resulted in an additional £800,000 in compensation being forecast
- The general insurance distribution class will have to fund a £29m contribution to the retail pool levy
- The FSCS is still assessing the likely compensation claims and potential additional levies required relating to East West Insurance Company going into administration
To read the full newsletter click here.