On 22 January 2021, the PRA and FCA jointly published a Consultation Paper setting out proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for 2021/22.
Under section 223(1) of the Financial Services and Markets Act 2000 (FSMA), the FCA and the PRA must set a limit for the total management expenses that the FSCS can levy on financial services firms. The MELL is the maximum amount that the FSCS may levy in a year for its operating costs without further consultation. Setting the right MELL ensures that the scheme has sufficient funding to exercise the functions conferred on it by Part XV of FSMA and by rules made by the FCA and the PRA.
The proposed MELL for 2021/22 is £105.5 million consisting of FSCS management expenses budget of £90.5 million and an unlevied reserve of £15 million. The MELL would apply from 1 April 2021, the start of the FSCS’s financial year, to 31 March 2022.
The deadline for comments on the Consultation Paper is 19 February 2021. The FCA is accepting responses on behalf of both the FCA and the PRA, and both authorities will consider the responses.