General insurance (GI) distributors, which include most health and protection advisers, will see their Financial Services Compensation Scheme (FSCS) fees fall to a total £900,000 in the 2026-27 financial year.
This is down 28% from £1.2m in 2025-26 as revealed by the FSCS in its latest management expenses budget.
Those intermediaries in the life distribution and investment intermediation (LDII) will see an 8% reduction in their fees to £32.5m, down from £35.3m.
Overall, the FSCS is proposing a 4% increase in its annual funding to £108m, up from £103.6m.
However, this includes a 6% reduction in core costs to £97m, plus an additional £11m to increase the body’s existing revolving credit facility (RCF) to £25.9m.
It said this would enable greater funding readiness and help to strengthen confidence in the UK’s financial services industry.
“Including the additional RCF costs, FSCS’s total budget for 2026/27 remains in line with inflation,” the FSCS continued.
“The latest forecast for 2025/26 remains at £108.6m, including an unlevied reserve of £5m, as announced in January 2025. We do not anticipate invoicing firms for the 2025/26 unlevied reserve.”
It is also increasing its investment budget by £500,000 but said most of the required investment in 2026/27 was being absorbed by the organisation itself, with strengthening insurance claims readiness one of the key targets.
‘Aligned with inflation’
FSCS chief executive Martyn Beauchamp (pictured) said the organisation was committed to delivering savings wherever possible.
“By driving operational efficiencies, we’ve absorbed much of the stated rise in management expenses, keeping the proposed 2026/27 budget aligned with inflation,” he said.
“Excluding the additional RCF costs, our budget is down 6% on 2025/26, and 11% in real terms.
“At the same time as carefully managing our costs, we’re investing in resilience to ensure we can continue to manage failures effectively and respond to evolving industry and customer needs.”
The consultation closes on 10 February.
