Budget Update - January 2023

Welcome to our FSCS Budget Update

Here we present our management expenses which includes our day-to-day running costs, as well as the costs associated with processing claims.
You can also read our Chief Executive, Caroline Rainbird’s, statement for more information.

  • The proposed budget for 2023/24 is £99.8m.
  • The latest forecast for 2022/23 is £89.2m.

Please note, alongside this information the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are consulting on our proposed budget for 2023/24 as part of their yearly Management Expenses Levy Limit (MELL) consultation.

Full Budget Update report

If you would like the FSCS Budget Update in an alternative format, please contact us.

The proposed budget for 2023/24 is £99.8m

This represents a £4.3m (5%) increase on the budget that was confirmed by the PRA and FCA in March 2022. This includes a:

  • £3.9m increase in investment to deliver essential strategic initiatives and the ongoing enhancement of FSCS processes and customer services;
  • £3.2m increase in controllable costs due to rising prices – i.e. rent and costs associated with critical business support functions such as IT and HR. This is a 5.9% increase, which is below inflation at 8.6% (published by the Office of National Statistics, September 2022); and
  • £2.8m reduction in volume-related costs, i.e. all costs associated with investigating and assessing claims, due to the expectation that fewer claims will be processed than in the 2022/23 budget.

We also propose an unlevied reserve of £10m for 2023/24

The FCA and PRA are consulting on an overall MELL of £109.8m. This takes into account a budget of £99.8m and an unlevied reserve of £10m. This contingency (£10m) ensures we have the funds to process a significant increase in claims for any unexpected large firm failures, should they arise. This is £5m less than the contingency fund proposed in 2022/23. Please note, that the unlevied reserve is only invoiced to firms if deemed necessary.

The latest forecast for 2022/23 is £89.2m

We expect to end this financial year £6.3m below budget compared with the 2022/23 budget announced in January 2022 (£95.5m).

As outlined in November's Outlook we now expect to pay out compensation on fewer claims, most of which relate to the Life Distribution and Investment Intermediation and Investment Provision classes. Further, we will not be using the unlevied reserve (£15m) and any budget surpluses (currently £6.3m) will be used to help offset the levy for the relevant classes in 2023/24. 

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