Financial Services Compensation Scheme  

FSCS expects management costs to be £99.8mn next year

FSCS expects management costs to be £99.8mn next year

The Financial Services Compensation Scheme (FSCS) expects its management expenses to be just under £100mn in 2023/24, a 5 per cent increase on the estimation made in March last year.

In a statement this morning (January 12), the FSCS said this includes a £3.9mn increase in investment to deliver “essential strategic initiatives” and the ongoing improvement of FSCS processes and customer services, as well as £3.2mn more in costs due to rising prices, for instance rent.

The figure also includes a £2.8mn reduction in the costs of investigating and assessing claims, as the FSCS expects that fewer claims will be processed next year.

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The FSCS said claims-handling infrastructure and support made up the largest part of its proposed expenses for next year, making up 76 per cent of the total budget.

The forecast for 2023/24 is an increase on the £89.2mn forecasted for 2022/23, which has dropped by £6.3mn since the last forecast.

The FSCS will also not be using the £15mn levied reserve it proposed in January last year, and will instead use the £6.3mn in expected budget surplus to offset the 2023/24 levy.

Caroline Rainbird, chief executive, FSCS said: “Although today we have the right teams and systems in place to process claims and make recoveries, the sheer complexity of claims now coming to FSCS means that we are likely to see costs increase over the coming years.

“This means it is critical that we start investing more in our claims handling capabilities now to ensure  we can continue providing an efficient service for years to come – one that is both accessible and swift for consumers who are left out of pocket when a firm fails, and cost-effective for the industry that funds us.”