CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26

Read CP25/1 (PDF)[1]

Why we are consulting

Under the Financial Services and Markets Act 2000 (FSMA), the FCA and the PRA must set a limit for the total management expenses that the FSCS can levy on financial services firms.

The MELL is the maximum amount the FSCS may levy in a financial year.  

We and the PRA propose the MELL for 2025/26 will be £108.6m, made up of:

• the FSCS management expenses budget of £103.6m
• an unlevied reserve of £5m

Although the proposed MELL is higher in nominal terms than the 2024/25 MELL, it is lower in real terms.

Who this is for

This is relevant to all FCA and PRA authorised firms, who fund the FSCS through levies.

Next steps

Online response form[2]

The consultation closes on 7 February 2025.

We’re collecting responses on behalf of both the FCA and the PRA.

Respond using the online form[2] or write to: Prudential and Redress Policy, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.

After the consultation, both authorities will consider the responses and resolve any issues raised.

We’ll issue a Handbook Notice and the PRA will publish a Policy Statement, so our respective final rules for the MELL are in place for 1 April 2025, the start of the FSCS’s financial year.

Background

The proposed MELL covers the FSCS’s costs of operating the UK’s statutory compensation scheme.  

Setting the right MELL makes sure the FSCS has enough funding to carry out its functions.

The proposed MELL would apply from 1 April 2025 until 31 March 2026.

For more detail on how the MELL is calculated and the FSCS unlevied reserve, read chapter 2 of the CP and the FSCS January 2025 budget update[3].