Chief Executive's statement - November 2026 Outlook
Welcome to the November 2026 edition of Outlook, where we provide our latest update on compensation and the levy for 2026/27, as well as an early view of the levy for 2027/28. This forecast, which will be updated in the spring, supports industry planning and provides visibility of emerging levy requirements.
The 2026/27 levy remains unchanged at £247m, with no additional levy anticipated this year. Our compensation forecast has increased by £25m since May, but our work to ensure strong recoveries, effective use of available surpluses and disciplined cost management means we have been able to maintain our levy position.
Total compensation costs are now forecast at £292m. The increase since earlier this year reflects what we are seeing across investment, self-invested personal pensions (SIPPs) and insurance claims, alongside higher Special Administration Regime costs. As claims develop, we will continue to monitor costs closely and update our forecasts accordingly.
Maximising recoveries remains a key priority for us. We now forecast £43m in recoveries by the end of the year — 30% higher than in May — with the majority helping to offset future levies and reduce the amount firms need to pay.
Green Realisations 123 Ltd (formerly known as MCE Insurance Company Ltd) is a good example of this in practice. So far this financial year, we have recovered approximately £29m from the firm, bringing total recoveries to £70m since it entered administration in 2021.
The early levy forecast for 2027/28 is £360m. This is principally driven by lower surplus balances available to offset the levy, with no significant change anticipated in costs related to compensating customers.
As previously signalled, in recent years we have used available surpluses to reduce the amount firms need to pay. By the end of 2026/27, these surpluses will have largely been utilised, with surplus balances expected to be over £100m lower. Alongside this, compensation for 2027/28 is currently forecast to be broadly similar to 2026/27, with a substantial proportion relating to SIPP advice and general investment claims, as well as insurance-related claims.
We are also continuously monitoring developments and updating our forecasts as we gain greater certainty around new failures, claims volumes, compensation values and potential recoveries. For complex insurance cases (such as East West Insurance Company Ltd), the timing and value of compensation can also evolve as the detailed legal and technical investigations progress.
Striking the right balance matters. We need to be ready to meet compensation costs when they arise, but without raising additional funds from industry before they are needed. Maximising recoveries, maintaining strong cost discipline and driving operational efficiencies will all help us achieve this balance.
Our next Outlook will be published in spring 2027, with our Budget Update published early in the new year alongside the Financial Conduct Authority and Prudential Regulation Authority’s 2027/28 Management Expenses Levy Limit consultation.
Building confidence for the future
FSCS protection helps build confidence and trust in financial services. Nine in 10 consumers who are aware of FSCS say our protection makes them more confident about taking out a product with an FSCS-protected provider, while 86% say it increases their trust in the sector.
To maintain confidence in financial services and deliver value for levy payers, FSCS must keep evolving. Through our five‑year strategy, we are building a scalable, cost‑efficient claims model that strengthens our readiness to respond as demand changes, while continuing to deliver timely, high‑quality outcomes for customers.
As rapidly advancing technology creates new opportunities to deliver better results for customers and industry, we are transitioning FSCS into a people-led, AI-enabled organisation with both purpose and performance at the heart of our culture.
With 25 years of protecting consumers behind us, and as we reach a full year of operating with the increased £120,000 deposit protection limit, our focus remains firmly on the future. That means being ready when customers need us, ensuring value for levy payers and continuing to provide the protection that underpins confidence in UK financial services.
Total compensation costs are now forecast at £292m. The increase since earlier this year reflects what we are seeing across investment, self-invested personal pensions (SIPPs) and insurance claims, alongside higher Special Administration Regime costs. As claims develop, we will continue to monitor costs closely and update our forecasts accordingly.
Maximising recoveries remains a key priority for us. We now forecast £43m in recoveries by the end of the year — 30% higher than in May — with the majority helping to offset future levies and reduce the amount firms need to pay.
Green Realisations 123 Ltd (formerly known as MCE Insurance Company Ltd) is a good example of this in practice. So far this financial year, we have recovered approximately £29m from the firm, bringing total recoveries to £70m since it entered administration in 2021.
The early levy forecast for 2027/28 is £360m. This is principally driven by lower surplus balances available to offset the levy, with no significant change anticipated in costs related to compensating customers.
As previously signalled, in recent years we have used available surpluses to reduce the amount firms need to pay. By the end of 2026/27, these surpluses will have largely been utilised, with surplus balances expected to be over £100m lower. Alongside this, compensation for 2027/28 is currently forecast to be broadly similar to 2026/27, with a substantial proportion relating to SIPP advice and general investment claims, as well as insurance-related claims.
We are also continuously monitoring developments and updating our forecasts as we gain greater certainty around new failures, claims volumes, compensation values and potential recoveries. For complex insurance cases (such as East West Insurance Company Ltd), the timing and value of compensation can also evolve as the detailed legal and technical investigations progress.
Striking the right balance matters. We need to be ready to meet compensation costs when they arise, but without raising additional funds from industry before they are needed. Maximising recoveries, maintaining strong cost discipline and driving operational efficiencies will all help us achieve this balance.
Our next Outlook will be published in spring 2027, with our Budget Update published early in the new year alongside the Financial Conduct Authority and Prudential Regulation Authority’s 2027/28 Management Expenses Levy Limit consultation.
Building confidence for the future
FSCS protection helps build confidence and trust in financial services. Nine in 10 consumers who are aware of FSCS say our protection makes them more confident about taking out a product with an FSCS-protected provider, while 86% say it increases their trust in the sector.
To maintain confidence in financial services and deliver value for levy payers, FSCS must keep evolving. Through our five‑year strategy, we are building a scalable, cost‑efficient claims model that strengthens our readiness to respond as demand changes, while continuing to deliver timely, high‑quality outcomes for customers.
As rapidly advancing technology creates new opportunities to deliver better results for customers and industry, we are transitioning FSCS into a people-led, AI-enabled organisation with both purpose and performance at the heart of our culture.
With 25 years of protecting consumers behind us, and as we reach a full year of operating with the increased £120,000 deposit protection limit, our focus remains firmly on the future. That means being ready when customers need us, ensuring value for levy payers and continuing to provide the protection that underpins confidence in UK financial services.