The FSCS has said the total levy payable by firms for the 2026/27 financial year is £247m, a fall of £95m on its previously published forecasts.
It has published the new figure in its spring outlook.
The levy has been cut partly because the industry-funded safety net recovered £34m from the estates of failed firms and relevant third parties in 2025/26.
Lower expected compensation payouts have also helped reduce the industry levy. The FSCS has cut its compensation forecast for the 2026-27 year by £27m as claims shift away from high-value pensions and SIPP operators.
It said it now expects to pay £267m to customers during the year rather than the £294m predicted in November.
The FSCS said the 2026/27 levy forecast also reflects higher surpluses carried forward from the previous year. This was driven in part by:
• A shift towards higher volumes of lower-value advice claims, alongside fewer higher-value pensions and SIPP operator claims;
• A higher proportion of Section 27 claims where no compensation has been due;
• Credit union failures remaining steady, however with fewer affected members resulting in lower-than-expected compensation costs; and
• Lower insurance costs from historic failures.
Taken together the factors, alongside strong recoveries and continued cost-efficiency, have contributed to the levy now expected to be £95m lower than its November forecast.
Martyn Beauchamp, chief executive at the FSCS, said: “Over the past year, we delivered our statutory responsibilities efficiently, paying compensation and pursuing recoveries in a way that supports timely and fair outcomes for customers, while delivering value for levy payers.
“In 2025/26, we made close to 12,000 advice claims decisions, supported customers when three credit unions were declared in default, responded to one new insurance firm going out of business, and continued to support those customers impacted by earlier failures. Total recoveries in the past three years alone were £145m, delivered through disciplined, cost-effective recovery expertise that helps offset the levy.
“Alongside this strong performance, we set a clear direction for the future with the launch of our new five year Strategy. It sets out how we will build a more scalable and cost efficient claims service, strengthen our purpose driven culture and act as a responsible steward of the levy, ensuring FSCS continues to deliver for customers and industry in the years ahead.”
The next FSCS Outlook will be published in the autumn.