FSCS Interim Levy

Some firms may have already received notification from the FSCS of an interim levy that is payable. Letters and emails were sent out  from 18th March this year as a part of a process to collect an additional levy for general insurance of £16 million.

There does not appear to be  a huge amount of information available on the web. The FSCS have a page buried deep in their web site that gives FAQs about the levy  here, and the FSA have a Q and A page about it also here.

What does it mean for firms?

As far as I can make out, it means that firms who fall within the General Insurance activity for the FSCS - which appears to be all those firms who fall into the FSA GI category (A19 fee component) will be  expected to fund the levy. The actual amount payable is based on the eligible turnover in the insurance category and I believe  that it is calculated as £17 per £10,000 of eligible business. THERE APPEARS TO BE A CUT-OFF OF £50 PAYABLE BELOW WHICH THE FSCS ARE NOT INVOICING FIRMS.

[EDIT - I am not entirely sure that there is a £50 cut off for the insurance levy so watch out. I know of at least four firms who have had invoices for less than £30 that relate specifically to the insurance interim levy.]

By my calculations (but my only source of  data on this  is a Mortgage Solutions article) this means that if you have earned more than £29k in eligible income, you are likely to be  billed, or more precisely, if your levy contribution is calculated at under £50, you may not be invoiced. [EDIT - Caution here, see my Edit note above]

However, there is a further issue. If you don't pay the invoice within 30 days you will be  charged a further £250 fine ( plus interest I believe).  This fee will be  administered by the FSA (FCA) and so as well as damaging your pocket, it is also at risk of damaging your ratings with the FCA. A good introduction to your new regulator!

What you need to do.

Have a look at the links I have provided above and see if you are eligible ( based on the levy calculation against eligible income) . If you are and if you have  not yet received either an email ( check spam folders!!) or a letter then I would suggest that you contact the FSCS and find out exactly if you are up for the levy and if so, how much.

If you are up for it then you need to pay it before 30 days are out ( from the date of invoice I presume) otherwise you may find yourselves with a  £250 fine to pay  as well.