The Financial Services Compensation Scheme (FSCS) has published its plan and budget for 2010/11.
The FSCS is the UK’s independent statutory compensation fund for customers of financial services firms authorised by the FSA. The FSCS can pay compensation if an authorised firm is unable, or likely to be unable, to pay claims against it. The FSCS is set up under the Financial Services and Markets Act 2000 and protects:
- Insurance broking (for business on or after 14 January 2005).
- Investment business.
- Home finance advice and arranging (for business on or after 31 October 2004).
The FSCS indicative levy is in three parts:
- Investment intermediation: a 2009/10 interim levy of £70 million before 31 March 2010 to cover the balance of costs of Pacific Continental Securities (UK) Limited and Square Mile Securities Limited (£27 million), as well as Keydata Investment Services and other investment claims expected in the year (£43 million).
- Deposit: a 2009/10 levy for specified deposit defaults (SDDs) for an estimated £376.9 million for the interest accruing on the bank default loans to 31 March 2010 and to be collected by 1 September 2010.
- The annual 2010/11 annual levy. This is currently estimated as an indicative total of £128.5 million for FSCS expenses and estimated compensation costs for the coming year (excluding interest on SDD loans).
The FSCS also states that two additional interim levy announcements for 2009/10 totalling £40 million may also be necessary. These are for the costs of structured products and payment protection insurance claims which could demand up to £20 million each this year.
View FSCS Plan and Budget:2010/11, 12 February 2010