FSCS Expects Higher Costs in Coming Years Due to Complexity of Claims

The forecast costs include the day-to-day operating costs of the FSCS and associated claims processing costs.

In addition, the total levy, including administration costs and estimated compensation, for 2023/24 is expected to remain at £478 million.

The Financial Conduct Authority (FCA) and Prudential Regulation Authority will consult on a £109.8 million 2023/24 Management ExpenseS Levy Limit (MELL), which includes a proposed FSCA management expense budget of £99.8 million and an unlevied reserve of £10 million.

Caroline Rainbird, chief executive of the FSCA, said claims-processing infrastructure and support costs make up the largest proportion of the budgeted management costs for 2023/24, amounting to 76% of the total budget, or £75.9m. This cost enables FSCS to perform its core function of helping customers get back on track as quickly as possible.

The budget for 2023/24 has been increased by 5% year-on-year. Caroline says “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 FSCA means that we are likely to see costs increase over the coming years.”