We are consulting on transitional provisions to ensure that the life and pensions intermediation class will continue to benefit from support from the retail pool over the next few months, consistent with the FSCS’s public messaging on this.
Following consultation, including with the FSCS, we recently made changes to the FSCS funding arrangements as part of a broader review of FSCS funding. One of the changes was to align the FSCS compensation levy year with the financial year. We have since become aware that a practical implication of this change is a different allocation of costs to the life and pensions intermediation class which was not intended. We think it is reasonable to now consult on transitional provisions which delay the effect of this change meaning in effect that we maintain the status quo. The provisions will ensure that the life and pensions intermediation class will continue to benefit from support from the retail pool over the next few months, consistent with the FSCS’s public messaging on this.
In this paper we propose to:
- allow the 2017/18 compensation year to run to its original timeframe
- require the Financial Services Compensation Scheme (FSCS) to run a nine-month compensation levy year for the period 1 July 2018 to 31 March 2019 with pro-rated class thresholds
- delay the introduction of arrangements for firms who pay fees on account by one year until April 2019
We are also consulting on minor clarifications to the new rule about levy paying arrangements for firms who pay fees on account.
Who this applies to
This consultation paper will be of interest to all firms who are current or potential contributors to FSCS funding.
We have published feedback and final rules in Handbook Notice 52 (PDF). We intend to proceed with the proposals that we consulted on as described above.
The rules set out in the Financial Services Compensation Scheme (Transitional Levy Provisions) Instrument 2018 (FCA 2018/4) come into force on 1 April 2018, except for FEES TP 18 which comes into force on 23 February 2018.