Financial Services Compensation Scheme new funding model from next April

The FSA has confirmed new funding arrangements that would enable the Financial Services Compensation Scheme (FSCS) to meet claims up to a total £4.03 billion a year. The model, which will operate from 1 April 2008, comprises five classes – life and pensions; investments; general insurance; deposits and home finance. Four, excluding deposits, also comprise two subclasses on which charges would initially fall. If a subclass was unable to provide enough funding, a call would be made on the main class and finally on a general retail pool. The FSA has decided not to pursue ideas for a wholesale pool, which might have added a further £1-2 billion, after objections that it would have a negative impact on UK competitiveness in global wholesale markets and also on principle that a firm should not have to contribute to a scheme from which it cannot benefit. The thresholds for the scheme are set out in the table below.