The products it protects include deposits held in banks, building societies and credit unions, investments, pensions, insurance and funeral plans
The Financial Services Compensation Scheme (FSCS) is set to shell out £367m in compensation during the 2025/26 financial year.
The FSCS, which acts as a safety net for customers of authorised financial services firms that fail or cease trading, revealed that this predicted payout is on par with the expected £372m for 2024/25. The scheme covers a range of products including bank deposits, investments, pensions, insurance and funeral plans.
Funded by the financial services industry through an annual levy, the FSCS confirmed that the levy for 2024/25 remains at the previously forecast £265m, with no additional charges anticipated for the remainder of the current fiscal year. However, the levy for 2025/26 is projected to rise to £394m due to lower surpluses being carried forward. Surpluses occur when the FSCS’s costs are less than expected, such as during the coronavirus pandemic when fewer firms failed and compensation costs were below forecast.
They can also arise when more money than anticipated is recovered from firms. Martyn Beauchamp, interim chief executive of the FSCS, stated: “While the levy is projected to increase in 2025/26, as discussed in previous outlook forecasts, cash surpluses have kept the levy below compensation levels in the last two financial years, as we’ve had significant surplus balances at the start of each year in some classes. This is no longer the case for 2025/26.”
He added: “In the next financial year our new operating model will be fully embedded. Alongside this, we are always looking at ways to further improve our claims processes, working hard to find efficiencies without significantly increasing costs.”
