FSCS confirms annual levy for 2024/25 is £265m

The Financial Services Compensation Scheme (FSCS) today publishes its latest Outlook including the latest update on the annual levy for 2024/25.

The total levy payable by firms for the 2024/25 financial year is now £265m, this is lower than the indicative levy announced in the November 2023 Outlook, and a small decrease from the final 2023/24 levy of £270m.

FSCS currently expects to pay £363m in compensation during 2024/25.

FSCS also successfully recovered more than £54m from the estates of failed firms and other relevant parties during 2023/24, helping to reduce the levy.

More detail on the compensation forecast for 2024/25  

The movement in FSCS's latest forecast is mainly driven by two funding classes - Life Distribution & Investment Intermediation (LDII) and General Insurance Provision.

The main reasons for the decrease include:

·    reduced average compensation values on pension transfer claims, as well as expecting to receive fewer new claims; and

·    large insurance payments being delayed because of the complex nature of buildings guarantee insurance claims, and the amounts being paid against some previous insurance provider failures reducing faster than anticipated.

Martyn Beauchamp, Interim Chief Executive of FSCS, said:

"We made a number of successful recoveries in 2023/24, with more than £54m recovered from the estates of failed firms and other third parties. This has added to surpluses in some funding classes being carried forward. We've used these surpluses to reduce the levy for 2024/25 to £265m.

In addition, we've refined our forecast for the year ahead - learning from what we've seen recently and taking note of persisting trends. This means a reduction in the compensation we expect to pay in 2024/25 which now stands at £363m.

As always, we will keep the industry informed of any changes to our forecasts in a timely fashion. The next Outlook will be published in the autumn."

-ENDS-

Media enquiries

Email - publicrelations@fscs.org.uk
Tel - 07730 668 558

Notes to editors

1. About FSCS

FSCS is the UK's financial compensation scheme that protects customers of authorised financial services firms if they fail or have stopped trading. FSCS currently protects:

·    Deposits held in banks, building societies and credit unions

·    Investments

·    Pensions

·    PPI

·    Debt management

·    Endowments

·    Mortgage advice

·    Insurance

·    Funeral plans

FSCS is independent and can pay compensation if an authorised firm fails and is unable to pay back money it owes its customers. FSCS's service is completely free to use and is funded by the financial services industry.  

2. About Outlook

Outlook, which includes a breakdown of the latest 2024/25 levy forecast for each PRA and FCA funding class, is available on FSCS's website.

The next full levy forecast for 2024/25 will be in the autumn edition of Outlook.