Today the FCA and Prudential Regulation Authority (PRA) launched a joint consultation on the management expenses levy limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2019/20. The MELL ensures that the FSCS has adequate funding to continue to operate and meet its objective of providing a compensation scheme for consumers.
The proposed MELL for 2019/20 is £79.6 million. This is made up of a budget of £74.6 million and an unlevied contingency reserve of £5 million. The budget of £74.6 million is an increase of 2.4% over last year’s budget of £77.7 million which is roughly in line with inflation. 71% of the FSCS’ budget (£53.1 million) covers claims handling which is the FSCS’ core function. The unlevied contingency reserve allows the FSCS to respond quickly and efficiently in the event of unforeseen firm failures. It can be levied without further formal consultation.
It is relevant to all FCA and PRA authorised firms. It is not directly relevant to financial services consumers or consumers groups.
Please send us any comments on the proposed MELL by 28 February 2019. The FCA is accepting responses on behalf of both the FCA and the PRA and responses will be considered by both authorities.
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Following consideration of responses, the FCA will issue a Handbook notice and the PRA a policy statement so that final rules can be in place for the start of the FSCS’ financial year on 1 April 2019.