FSCS supplementary levies for 2018/19

Find out more about the FSCS’s supplementary levy and why the retail pool is triggered.

On 31 January 2019, the FSCS announced that it would be raising supplementary levies for this levy year.

FSCS explained in their November 2018 edition of Outlook that it was  extremely likely that it would have to raise a supplementary levy for the life and pensions intermediation class. The levy limit for 2018/19 has already been reached for this class. A further amount of £78m is required for this class and will therefore be funded by the retail pool.

FSCS is also raising a supplementary levy for the deposit class and general insurance class.

The FSCS letter to levy payers explains the reason for the supplementary levy.

Read the FSCS letter (PDF)

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 in 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 for this year.

The FSA Policy Statement PS13/04 confirmed the final rules in relation to the retail pool, including the contribution from providers.

Calculation of the FCA retail pool

The retail pool levy for the FCA funding classes is based on a firm’s annual eligible income reported for the 2018/19 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 investment provision and intermediation classes (SD01 and SD02), and home finance intermediation class (SE02), will not be levied for their share of the retail pool levy. The FSCS will use surplus funds held for these classes to offset against their contribution.

The levy for firms in the FCA provider classes F, G and H is calculated using the same data for the equivalent PRA classes. The levy for firms in class I is calculated using the same data for FCA fee-block A2.

PRA FSCS classes (A deposit, B1 general insurance provision and C1 life insurance provision) do not contribute to the retail pool.

Table 1: Distribution of the £78.13m supplementary levy to the retail pool
 

FSCS class

FSCS class description

Tariff base

Class share of the Retail Pool

Estimated levy

B2 (SB02)

General insurance intermediation

annual eligible income (AEI)

£15.38m

£1.63 per £1,000 of AEI

D2 (SD02)

Investment intermediation

annual eligible income (AEI)

£12.08m

not applicable (offset by surplus)

E2 (SE02)

Home finance intermediation

annual eligible income (AEI)

£3.22m

not applicable (offset by surplus)

D1 (SD01)

Investment provision

annual eligible income (AEI)

£16.11m

not applicable (offset by surplus)

 K (SD01)  Debt management  Debts under management (DUM)/value of lending (VOL)

£1.61m

£6.27 per £1m of DUM/VOL

F (SRF1)

Deposit acceptor's contribution

Protected deposits (PD)

£8.86m

£7.57 per £1m of PD

G (SRG1)

Insurers life contribution

Relevant Net Premium Income (RNPI) and Eligible Liabilities (EL)

£5.64m

£43.95 per £1m of RNPI and £1.21 per £1m of EL

H (SRH1)

Insurers general contribution

Relevant Net Premium Income (RNPI) and Eligible Liabilities (EL)

£2.82m

£44.71 per £1m of RNPI and £9.58 per £1m of EL

I (SRI1)

Home finance providers & administrators contribution

Number of home finance transactions (NOHFT)

£3.63m

£0.52 per NOHFT

Table 2: Deposit class and general insurance class supplementary levies
 

FSCS class

FSCS class description

Tariff base

Esimated levy

SA01

Deposit

Protected Deposits (PD)

£13.14 per £1m of PD

SB01

General insurance

Relevant Net Premium Income (RNPI)

£229.54 per £1m of RNPI
      Eligible Liabilities (EL) £49.07 per £1m of EL

Deposit class (SA01) levy is adjusted using the firm’s aggregate risk weight (ARW).

Online fees calculator

The supplementary levies are not included in the online fees calculator.

Cancelling firms: Firms that were authorised as at 1 April 2018 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.