FSCS November 2025 Outlook: Compensation at £315m, 2026/27 Levy Forecast £342m

Chief Executive's statement - November 2025 Outlook

Welcome to the November 2025 edition of Outlook where we share an update on compensation figures for this financial year, as well as an early view of the levy forecast for 2026/27.

With over half the year behind us, it’s a good moment to reflect on FSCS’s role in maintaining confidence in UK financial services and supporting financial stability – two foundations of long-term economic growth. I’m proud of our continued focus on delivering compensation efficiently and ensuring protection and continuity when firms fail. I’m also proud of our commitment to providing transparency around our levy forecasting and supporting the financial services industry in its planning – with Outlook playing a central role in this.

You can find out more and access previous editions at www.fscs.org.uk/outlook.

By Martyn Beauchamp
Published: 12 November 2025 FSCS news Progress in 2025

We’ve now completed the transition of our claims service, bringing the majority of our claims management and all customer call-handling in-house. This shift is focused on enhancing the customer experience and boosting productivity. It’s also helping us build our internal expertise and flex our resources across the wide range of claims we handle daily.

These changes are already delivering results. Notably, we’ve halved the time spent chasing third parties for critical data needed to calculate potential losses for customers.

Knowing FSCS can act fast when a financial firm fails gives people the confidence to invest in financial products and services. This relies on our readiness, whether people need us today, years from now, or simply take comfort in knowing we’re here. That’s why we invest in being prepared, streamlining our claims handling, speeding up deposit payouts through digital payments, and upgrading our insurance claims systems to reduce disruption to the protection policies that people and businesses rely on.

2025/26 is a pivotal year for FSCS as we shape our next five-year strategy. Our priority remains staying future-fit, ready to deliver for customers and industry alike. As a responsible steward of the levy, we’ll also continue to proactively pursue recoveries from those responsible for financial harm, protecting both customers and our levy payers.

Our latest forecasts for 2025/26

The 2025/26 levy remains as forecast in May 2025 at £356m and we don’t anticipate any additional levies for firms.

We expect to pay slightly less in compensation over the year than anticipated in May, a decrease of 5% to £315m (from £332m). This is mainly due to a change in the types of claims we expect to pay out for customers, with more lower value advice claims expected within the Life Distribution & Investment Intermediation (LDII) class and fewer higher value SIPP operator claims within the Investment Provision class.

Maximising recoveries is also a critical part of our role and our efforts in this area continue to gain momentum, with close to £40m anticipated by the end of 2025/26. This work remains a key priority for us, and we aim to exceed our recoveries forecast wherever possible.

An initial look at 2026/27

Our early forecast of the total levy in 2026/27 is £342m, which represents a small decrease on 2025/26. This is based on a forecast of £294m in compensation costs for 2026/27.

These early expectations for 2026/27 reflect the changing claims environment. We currently forecast lower compensation costs in the Investment Provision class, mainly driven by fewer claims against SIPP operators. A higher opening balance in this class is also anticipated as we carry forward surpluses from 2025/26.

Additionally, we expect some funding classes to begin the period with lower opening balances, as surpluses carried over from previous years have been effectively utilised. This brings the levy forecast for these classes in closer alignment with projected compensation costs.

In early 2026 we will publish an update to our Budget. This will provide full details of our management expenses for 2026/27. This forms part of our overall levy and is jointly consulted on by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA). Our May 2026 Outlook will provide an update to our forecasts and confirm the levy for 2026/27.

Martyn Beauchamp

Chief Executive