FSCS Budget £103.6m, 2025/26 On Track; Proposes £113m Levy Limit for 2026/27

Budget Update - Chief Executive's Statement

As we approach the close of this financial year, I am pleased to present the latest Budget Update. This publication outlines our management expenses, plans for the year ahead, and our ongoing commitments to both transparency and being a responsible steward of levy payer funds.

You can see further details on our levy and compensation forecasts for 2026/27 in last November’s Outlook publication. We’ll provide our next full levy update in the spring.

By Martyn Beauchamp
Published: 13 January 2026 FSCS news Latest 2025/26 forecast

I am pleased to confirm that we remain on track to be within our budget of £103.6m for 2025/26. Our overall costs remain flat, and we’re continually driving efficiencies to deliver value for levy payers, while delivering good outcomes for customers.

Our proposed 2026/27 budget

Our budget ensures we can effectively discharge our core statutory responsibilities. This includes providing compensation to get customers back on track quickly when firms fail and pursuing recoveries to help reduce levies for firms. As part of our wider duties, it now also includes providing funds to the Bank of England to recapitalise failing deposit taking institutions, further strengthening confidence in UK financial services.

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) are consulting on a total Management Expenses Levy Limit (MELL) for FSCS of £113m. This includes a core budget of £97m, plus an additional £11m to support an enhanced revolving credit facility (RCF). This enhanced RCF ensures FSCS can continue paying compensation quickly, as well as support the Bank of England’s new recapitalisation power, reducing the risk that public funds will be needed in a firm default.

The additional cost (£11m) in 2026/27 will be allocated to the Deposits class and distributed in proportion to each firm’s level of protected deposits.

An additional £5m in unlevied reserves, which is unchanged on 2025/26, is also included on top of our main budget (£108m).

Balancing delivery and cost

Our disciplined approach to cost management and drive for efficiencies means our overall budget for 2026/27 is broadly in line with inflation. Excluding the additional costs for the enhanced RCF, our core budget for the coming year represents a reduction of 6% compared to 2025/26, and 11% in real terms.

Including the additional RCF costs, our budget reflects a 4% (£4.4m) increase. However, this still aligns with inflation as we’ve absorbed most of the additional RCF costs and also expect a reduction in advice claims next year.

In 2026/27, we’ll be taking the opportunity to further streamline and enhance our processes, improving productivity and speeding up claims handling for our customers.

Investing for a resilient future

Investing in our future is essential for delivering our strategic initiatives and ensuring FSCS remains resilient. We’re absorbing much of the required investment in 2026/27, resulting in a moderate rise of £0.5m to investment costs. This targeted investment will enable further enhancements to our depositor protection programme and strengthen our insurance claims readiness – both of which reinforce our ability to manage failures and meet the evolving needs of the industry and our customers.

FSCS is one of the central pillars of stability in the UK’s financial system. Our ability to compensate customers quickly when firms fail and provide the necessary funds for the swift and orderly resolution of deposit taker failures, helps ensure the UK remains a trusted place to do business.

Martyn Beauchamp
Chief Executive