UK PRA and FCA consult on the FSCS MELL for 2026/27

The UK Prudential Regulation Authority (PRA) and the UK Financial Conduct Authority (FCA) have published consultation paper CP1/26, proposing a management expenses levy limit (MELL) of GBP113 million for the UK Financial Services Compensation Scheme (FSCS) for 2026/27. The MELL ensures the FSCS has enough funding to carry out its functions.

The proposed MELL comprises a GBP108m management expenses budget, a GBP4.4m increase from 2025/26, broadly in line with inflation, and an unlevied reserve of GBP5m. Excluding the cost of the FSCS's revolving credit facility (RCF), which is being expanded to GBP3bn to support the Bank of England's recapitalisation powers and ensure faster depositor payouts, the proposal represents a nominal and real‑terms reduction in the FSCS budget. The proposed investment budget is GBP5.5m, representing a 10% increase relative to 2025/26. This is to support the first year of the FSCS' new five-year strategy, which is expected to launch in 2026/27. The budget covers eight strategic initiatives, including plans for improvements to advice claims handling, further enhancements to depositor and policyholder outcomes and upgrades to risk management processes and cybersecurity operations, in line with FSCS' objectives and regulators' priorities.

The deadline for feedback on the proposals is 10 February, with final rules intended to take effect from 1 April. The proposed rules through which the PRA and FCA set the MELL are set out in the Appendices.

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