FSCS Sees Costs Increase due to "Sheer Complexity of Claims"

The Financial Services Compensation Scheme (FSCS), the UK's statutory Deposit insurance and investors compensation scheme, presented its latest forecasted management expenses for 2022/23 of £89.2 million, including FSCS's day-to-day running costs, as well as costs associated with processing claims.

In addition, FSCS forecasts an annual management expenses budget for 2023/24 of £99.8 million. The total levy for 2023/24, which includes both the management expenses and estimated compensation payments, remains forecast at £478m.

The Financial Conduct Authority and Prudential Regulation Authority will be consulting' on an overall 2023/24 Management Expenses Levy Limit (MELL) of £109.8m. This includes the proposed FSCS's management expenses budget of £99.8m and an unlevied reserve of £10m.

Caroline Rainbird, Chief Executive of FSCS, said: "Claims-handling infrastructure and support make up the largest part of our proposed management expenses for 2023/24, amounting to £75.9 million or 76% of the total budget. This allows FSCS to carry out its core function, ensuring we are helping customers get back on track as quickly as possible."

"The budget for 2023/24 represents a 5% increase against our budget announced this time last year," Caroline added. "Although today we have the right teams and systems in place to process claims and make recoveries, the sheer complexity of claims now coming to FSCS means that we are likely to see costs increase over the coming years."