Find out more about the FSCS’s supplementary levies, with the retail pool triggered.
On 16 January 2017, the FSCS announced that there will be supplementary levies raised this levy year 2016/17 to meet unforeseen compensation costs. The levies affect:
- Life & Pensions Intermediation
- General Insurance Provision
- Home Finance Intermediation classes
The FSCS letter to levy payers also explains the reason for the supplementary levy.
This is the first time that a class has reached its annual funding limit under the current funding model and where the retail pool has been triggered.
Read about class funding limits in our Handbook (FEES 6 annex 2).
The FCA retail pool
The FSCS uses a cross-subsidy approach to fund the claims for a class that has exceeded its annual funding limit. The cross-subsidy is funded by the classes belonging to the FCA retail pool.
The classes that participate to the retail pool and their funding limits are set out in FEES 6 annex 5.
The amount of funding provided by the retail pool is allocated to each class in proportion to the size of their retail pool levy limit. This is set out in FEES 6.5.A.1. See table 1 for the amounts allocated to classes.
The FSA Policy Statement PS13/04 confirms the final rules in relation to the retail pool, including the contribution from providers.
Calculation of the FCA retail pool
The levy for firms in the FCA provider classes is calculated on the same basis as the FSCS base cost levy.
The retail pool levy for the FCA funding classes is based on a firm’s annual eligible income reported for the 2016/17 levy year. This is the same data that was used to calculate the FSCS compensation cost levy as shown on a firm’s annual fee and levies invoice.
Firms in the general insurance intermediation class (SB02) will not be levied for their share of the retail pool levy. The FSCS holds surplus funds for this class and will offset this against their contribution.
PRA FSCS classes (A1 deposit, B1 general insurance and C1 life insurance) do not contribute to the retail pool.
Surplus of funds for Investment Intermediation class (SD02): £50m
The claim volumes have been lower than forecast for the Investment Intermediation class and FSCS are forecasting a £60m surplus of funds. FSCS have decided to return £50m of this surplus to firms in this class and retain the balance of £10m to meet any unforeseen compensation costs in the remainder of the year.
Firms in this class will be levied for their SD02 share of the retail pool and will receive a credit for their share of the £50m.
Cheque refunds will automatically be issued to firms where their overall net amount is a credit. Cheques will be sent within 30 days of the date of credit note.
Online fees calculator
The supplementary levies are not included in the online fees calculator.
Cancelling firms: Firms that were authorised as at 1 April 2016 and applied to cancel their part IV permission part way through the current fee year and are still authorised are liable for their share of the levy.
|FSCS class||FSCS class description||Tariff base||Supplementary levy||Estimated levy||Class share of the Retail Pool||Estimated levy|
General Insurance Provision
|relevant net premium income||
(75% of £63m)
|£1.07 per £1,000 of RNPI||not applicable||-|
|eligible gross technical liabilities||
(25% of £63m)
|£0.23 per £1,000 of EGTL||not applicable||-|
|SC02||Life & Pensions Intermediation||annual eligible income||£10m||£3.04 per £1,000 of AEI||not applicable||-|
|SD02||Investment Intermediation||annual eligible income||
|£11.33 per £1,000 of AEI (credit)||£4.11m||£0.93 per £1,000 of AEI|
|SE02||Home Finance Intermediation||annual eligible income||£15m||£11.88 per £1,000 of AEI||£1.09m||£0.86 per £1,000 of AEI|
|SD01||Investment Provision||annual eligible income||-||-||£5.47m||£1.13 per £1,000 of AEI|
|Class F||Deposit Acceptor's Contribution||FCA A001 fee||not applicable||-||£3.01m||£43.83 per £1,000 of FCA fee|
|Class G||Insurers Life Contribution||FCA A004 fee||not applicable||-||£1.92m||£46.84 per £1,000 of FCA fee|
|Class H||Insurers General Contribution||FCA A003 fee||not applicable||-||£0.96m||£40.59 per £1,000 of FCA fee|
|Class I||Home Finance Provision||FCA A002 fee||not applicable||-||£1.23m||£66.56 per £1,000 of FCA fee|