FSCS publishes update on 2025/26 compensation levy and 2026/27 forecast

On November 12, 2025, the Financial Services Compensation Scheme (FSCS) published the November 2025 edition of its Outlook newsletter.

In the newsletter, the FSCS confirms that:

• The 2025/26 compensation levy remains at £356m, as forecast in May 2025. It does not expect to need any additional levies from firms during this financial year.
• The initial levy forecast for 2026/27 is £342m. 

The early expectations for 2026/27 reflect the changing claims environment. The FSCS currently forecasts lower compensation costs in the investment provision class, which is mainly driven by fewer claims against self-invested personal pension operators. A higher opening balance in this class is also anticipated as it carries forward surpluses from 2025/26. Additionally, the FSCS expects some funding classes to begin the period with lower opening balances as surpluses carried over from previous years have been effectively used.

The FSCS will publish its budget update in early 2026, which will provide full details of its expected management expenses for 2026/27. These expenses form part of the overall levy and will be consulted on by the Prudential Regulation Authority and the Financial Conduct Authority. The FSCS will confirm the final levy in May 2026.