Context
The FSCS issues an ‘Outlook’ twice a year, and the latest issue has been published. This issue addresses the fact that the forecast on which the total FSCS levy for 2021/22 is based has been reduced from £1.03 billion to £833million.
Key points to note
- Due to the extension of government support schemes, some firms that looked likely to fail this year could now fail in the 2022/23 financial year and beyond.
- In 2020/21, FSCS saw lower claims volumes relating to recent insurance failures than had been expected.
- There are also a number of self-invested personal pension (SIPP) operator claims that it now expects to be paid in 2021/22, rather than in 2020/21.
- These factors have led to a surplus for the 2020/21 financial year, which has been used to offset the previously forecast £1.04bn levy.
- The Total 2021/22 levy forecast for the GI Distribution class is reducing from £146.8m to £74m. This includes a substantial contribution to the retail pool which will be levied separately after the annual fees invoice becomes due for payment (as the final amount has yet to be confirmed).
- The FCA should be revising its fee calculator in due course.
The British Insurance Brokers’ Association (BIBA) has welcomed the FSCS’ revised broker levies for this year, and is “…delighted that the total broker contribution has reduced from £146.8m to £73.8m with the levy for the broking funding class now being £12.9m compared to the forecast of £14.4m”, and the broker contribution to the retail pool has reduced significantly to £60.9m from £132.4m.
Next actions
None – for information