This Consultation Paper is relevant to all FCA and PRA authorised firms and sets out the FCA and PRA proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2023/24.
The FSCS is a fund of last resort to provide compensation for consumers when financial services firms fail. Its other functions include:
- making recoveries from failed financial institutions
- promoting consumer awareness of FSCS protection and
- verifying account information that firms provide to enable faster pay-out to depositors.
Under section 223 (1) of the Financial Services and Markets Act 2000 (FSMA), a limit must be set for the total management expenses that the FSCS can levy on financial services firms. The MELL is the maximum amount that the FSCS may levy in a financial year for its operating costs without further rule-making by the FCA and the PRA after consultation. Setting the right MELL ensures that the scheme has sufficient funding to exercise the functions conferred on it by Part XV of FSMA and by rules made by the FCA and the PRA.
The proposed MELL for 2023/24 is £109.8 million consisting of:
- the FSCS management expenses budget of £99.8 million
- an unlevied reserve of £10 million.
The proposed MELL is £0.7 million lower than the 2022/23 MELL of £110.5 million and would apply from 1 April 2023, the start of the FSCS’s financial year, to 31 March 2024.
More details on the MELL, how it is calculated and an explanation of the FSCS’s unlevied reserve can be found in Chapter 2 and in the FSCS’s 2023/24 Budget Update.
This consultation closes on 9 February 2023. Comments should be submitted using the online response form on the FCA’s website. The FCA is accepting responses on behalf of both the FCA and the PRA, and both authorities will consider the responses. Subject to the responses to this consultation, the FCA will then issue a Handbook Notice and the PRA will publish a Policy Statement so that final rules can be in place for the start of the FSCS’s financial year on 1 April 2023.
Suitability reports – silver bullet, or not?
Paul Jay Compliance, Suitability DB Pension, FCA, MiFID, Pension, Pension Transfer, PI, transfer, Xplan
If you ask most advice firms which part of the advice process consumes the most time, most will reply: “Suitability Reports”. Based on the mammoth documents that some firms still produce, we can understand why. We do have some sympathy with firms though. On the one hand they’re told by the FCA that reports are […]