Advisers working in the health and protection market will not face paying a levy for the Financial Services Compensation Scheme (FSCS) this year.
In its latest update, the regulator said it expects its levy for advisers in the general insurance distribution class, which includes those in the health and protection sectors, to fall from £5m to nil in the 2023/24 financial year.
The change is as a result of the year ended surplus from the 2022/23 financial year now being expected to cover the costs of the current financial year.
The FSCS added it was not expecting any new firm failures in the sector in 2023/24.
Overall the annual levy for 2023/24 is now £270m, £208m lower lower than the indicative figure announced in November 2022.
This is less than half the final 2022/23 levy which was £625m. The FCSC added that while the levy had decreased, it still expected compensation costs in 2023/24 to be high at £471m.
The FSCS added it does not expect a retail pool levy in 2023/24 as no class is expected to breach its annual levy limit.
FSCS chief executive Caroline Rainbird (pictured) said: “This is a significant reduction from the initial estimates that we shared in November, however, in total, we still expect to pay £471m in compensation this year – the sixth year in a row that we are close to or above £500m.
“The gap between the compensation we expect to pay (£471m), and the levy we need to charge (£270m), is covered by the surpluses that we are carrying over from last year.”