The Financial Services Compensation Scheme says its management expenses budget for the year to next March will be £103.6m, up 0.5% on the current budget.
However, the body’s industry levy will jump by 49% to £394m as it “expects lower surpluses to be taken forward,” it confirmed in an earlier November outlook.
The body, which handles consumer claims against failed financial firms, said that its “cash surpluses have kept the levy below compensation levels in the last two financial years.
“This is no longer the case for 2025/26 as they have been used up in most classes, resulting in a higher overall levy.”
FSCS interim chief executive Martyn Beauchamp points out in an update today: “The majority of our budget covers claims-handling costs.
“It also funds other essential activities, including pursuing recoveries, investments to improve the efficiency of the organisation and promoting consumer awareness of FSCS protection and our claims service which is free to customers at the point of use.”
Beauchamp adds: “The increasing complexity of the claims that now make up the majority of FSCS’s work could lead to increased cost and means claims often require more specialist resource and deeper investigation.
“For example, the amount of data that we receive on average per claim has increased by 89% in the last two years.”