FSCS reduces 2026/27 levy forecast to £247m

The Financial Services Compensation Scheme (FSCS) has reduced its levy forecast for 2026/27 to £247m, with compensation payments of £267m expected during the year, its May 2026 Outlook has revealed.

This represents a reduction of £95m compared to the previous year, with the FSCS noting that the compensation environment was continuing to evolve, especially for advice firms.

The forecast levy cut was driven by higher volumes of lower-value general investment claims and fewer higher-value pensions and self-invested personal pension (SIPP) operator claims.

There were also a higher proportion of rejected Section 27 claims where no compensation was due, alongside surpluses being carried forward from the previous year, strong recoveries, and the organisation’s focus on cost-efficiency.

During 2025/26, more than £34m was recovered from the estates of failed firms and relevant third parties, with recoveries over the past three years totalling £145m.

“Over the next five years, FSCS will focus on further enhancing our scalable, cost-efficient claims model to continue to provide timely, fair and quality customer outcomes; on embedding an enduring purpose-performance culture; and on being a responsible steward of the levy by effectively managing cost and risk, while continuing to maximise recoveries to offset future levies,” said FSCS chief executive, Martyn Beauchamp.

“These priorities will guide how we deliver for customers and industry in the year ahead and beyond.

“Above all, as I look ahead to the coming year, FSCS will stay true to its purpose, supporting financial stability by giving consumers confidence, continuity and compensation when authorised financial services firms fail.”

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