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CP17/36: Reviewing the Funding of the FSCS Scheme

CP17/36: Reviewing the funding of the Financial Services Compensation Scheme (FSCS): feedback from CP16/42, final rules, and new proposals for consultation.

The FCA is seeking to consult on proposals to change how the Financial Services Compensation Scheme (FSCS) is funded and the coverage it provides to consumers.

The consultation paper is seeking to address three key issues:

  • options for reducing harm to consumers by giving firms incentives not to carry out activities for which they have no professional indemnity insurance (PII) cover, and also to reduce the burden on the FSCS through alternatives to capital and PII (for discussion) 
  • options for redistributing the bill and smoothing costs to address the perceived unpredictability and volatility of FSCS levies (for consultation) 
  • increasing compensation limits to reflect changes to the options available to consumers when they retire (for consultation) 

In this Consultation Paper, the FCA are also publishing final rules that will require contributions from certain consumer credit firms.

The FCA expect to publish a Policy Statement in the first half of 2018. It will contain responses to the feedback we receive, and made rules for the areas consulted on in this paper. The rules consulted on in this paper will be made in time for implementation in the 2019/20 financial year.

See the consultation paper here.