The Financial Services Compensation Scheme (FSCS) has proposed a management expenses budget of £103.6m for the 2025/26 year, a 0.5% increase on the previous year’s budget.
This will ensure it has funding to meet its running costs and carry out core functions for the year.
The FSCS said the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are consulting on an average levy limit of £108.6m, which includes a core budget of £103.6m and an unlevied reserve or contingency fund of £5m.
This reserve is unchanged from the contingency fund last year.
This forecast is currently within the FSCS’ budget of £103.1m, and the organisation said it had made some savings with lower claims processing costs than originally expected.
Any budget surpluses will be used to offset the levy for the relevant classes this year.
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The levy for this year remains the same as forecast in November’s outlook. This has been proposed as £394m and includes no additional levy for mortgage brokers, with last year’s surplus expected to cover this year’s costs.
Martyn Beauchamp, interim chief executive of FSCS, said: “We have continued to ensure we absorb as many inflationary rises as possible, keeping our expected management expenses in line with the current financial year.
“We have invested in staff to enhance our team of experts and strengthen our internal capabilities. We are funding this investment in expertise with savings from reductions in outsourced claims-handling costs and professional fees.”
He added: “Next year, we come to the end of our three-year plan to build our in-house claims-handling capability. This major change to our operating model has given us greater control and flexibility to handle the variety of claims we receive each day.
“This transition is progressing well, continuity of service has been maintained, and we are on schedule to be fully embedded in the 2025/2026 financial year.”
