The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have published a joint consultation proposing the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) for 2026/27. The proposal would cap the FSCS’s operating-cost levy on PRA- and FCA-authorised firms at GBP 113 million, comprising a GBP 108 million management expenses budget and a GBP 5 million unlevied reserve, applying from 1 April 2026 to 31 March 2027. The GBP 108 million budget is GBP 4.4 million (4%) higher than 2025/26 and is described as broadly in line with inflation, while the consultation notes that excluding a new enhancement to the FSCS revolving credit facility (RCF) the budget would be lower on a like-for-like basis. The RCF is forecast to cost GBP 18 million in 2026/27 (up GBP 11 million) to support an enhanced GBP 3 billion facility, including termination fees for the existing GBP 1.45 billion RCF, and the additional cost would be allocated to the deposits class only. The budget also reflects changes in cost mix, including higher controllable costs (driven mainly by the RCF and higher people costs), a 23% reduction in volume and complexity-driven costs to GBP 32.7 million, and a 10% increase in investment costs to GBP 5.5 million to support the first year of a new five-year strategy. Base costs are set at GBP 36.6 million (split 50/50 between PRA and FCA fee blocks) and specific costs at GBP 71.4 million, with the PRA funding class allocation forecast to rise to GBP 51.1 million and the FCA allocation to fall to GBP 56.9 million. Responses are requested by 10 February 2026. Following consideration of feedback, the PRA plans to issue a policy statement and the FCA a Handbook Notice so final rules can take effect from 1 April 2026.
Prudential Regulation Authority 2026-01-13
UK Prudential Regulation Authority and Financial Conduct Authority consult on FSCS management expenses levy limit of GBP 113 million for 2026/27
The Prudential Regulation Authority and the Financial Conduct Authority are consulting on a proposed Financial Services Compensation Scheme Management Expenses Levy Limit of GBP 113 million for 2026/27, comprising a GBP 108 million management expenses budget and a GBP 5 million unlevied reserve. The budget is 4% higher than 2025/26, mainly reflecting an GBP 18 million forecast cost for an enhanced GBP 3 billion revolving credit facility, with the additional cost allocated to the deposits class, and includes changes in cost mix and PRA/FCA funding allocations.