The Financial Services Compensation Scheme (FSCS) has confirmed that its 2025/26 levy will remain unchanged at £356m as previously forecast.

As a result, no additional levy is expected for financial services firms for the remainder of the current financial year.

The FSCS levy is a fee paid by authorised firms to fund the compensation scheme, covering its running costs and providing compensation to customers when a firm fails and is unable to meet its financial obligations.

In its latest outlook, the FSCS said that maximising cost-effective recoveries remains a key priority and that progress in this area had continued steadily. Recoveries help to reduce the levy charged to firms, and this year the FSCS is expecting to recover nearly £40m from failed firms and relevant third parties.

FSCS chief executive, Martyn Beauchamp, said: “As a responsible steward of the levy, we remain focused on reducing costs to firms wherever possible while delivering the best outcomes for our customers.

“That’s why we proactively pursue recoveries and now expect to recover almost £40m by year-end, £5m more than forecast in May. Our recoveries help to offset the levy for firms and ensure those most responsible for financial harm are held to account.”

To support the financial services industry in its planning for the year ahead, the FSCS has also published an initial view of the 2026/27 levy.

The scheme is anticipating the total levy for 2026/27 to be broadly in line with this financial year, dropping slightly to £342m. The FSCS indicated that the initial forecast is driven by an anticipated reduction in compensation costs compared to 2025/26, primarily driven by fewer claims involving self-invested personal pension operators.

Head of Public Affairs at trade body PIMFA, Simon Harrington, commented: “We are pleased to see that the overall levy is forecast to fall in 2026/27. The FSCS continues to play a significant role in increasing confidence in financial services.

“Whilst it would be preferable to exist in a no failure environment, we continue to be optimistic about the stability of claims relative to even five years ago.

“While small increases in the life distribution and investment intermediation (LDII) class are regrettable, they should be balanced out by a significant decrease in the investment provision class. We remain concerned about the rushed implementation of pension freedoms and the possible impact that could have on this sector, but it remains the case that this harm has not and may not crystallise.”

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