*Direct compliance obligation: All PRA and FCA-authorized firms that pay FSCS levies, including: Banks and credit institutions Insurance firms and intermediaries Investment firms and asset managers Payment service providers Credit unions (with specific consideration regarding RCF cost allocation) *Scope: The policy statement explicitly states it is "relevant to all FSCS levy-paying PRA and FCA authorised firms" and contains no material requiring action by retail consumers or consumer groups.

What should firms consider doing?

*Immediate compliance actions for affected firms: *Budget planning: Incorporate the £113 million MELL into financial forecasting and levy allocation models for the 2026/27 financial year (April 1, 2026 onwards) *Levy calculation: Ensure systems are updated to reflect the new budget allocation across PRA and FCA funding classes (detailed in Appendix 4 of CP1/26) *Reserve provisioning: Account for the £5 million unlevied reserve in contingency planning, recognizing FSCS may levy additional funds at short notice for unforeseen costs *RCF cost allocation: Confirm whether your firm is subject to the expanded RCF cost allocation (particularly relevant for credit unions, which raised concerns during consultation) *Accounting treatment: Update financial statements and regulatory reporting to reflect the new levy obligations effective April 1, 2026

🇬🇧 PRA Policy Statement high

PS8/26 – Financial Services Compensation Scheme – Management Expenses Levy Limit (MELL) 2026/27

Q: What does PRA's "PS8/26 – Financial Services Compensation Scheme – Management Expenses Levy Limit (MELL) 2026/27" change?

The final MELL for 2026/27 comprises: - Management expenses budget: £108 million (£4.4 million increase from 2025/26, broadly in line with inflation) - Unlevied reserve: £5 million (for unforeseen costs without requiring further consultation) - Total MELL: £113 million Budget allocation details: - Investment budget: £5.5 million (10% increase from 2025/26) supporting the FSCS' new five-year strategy launching in 2026/27 - Strategic initiatives: Eight programs including improvements to advice claims handling, depositor and policyholder outcomes, risk management, and cybersecurity operations - Revolving Credit Facility (RCF) enhancement: Expanded to £3 billion to support the Bank of England's recapitalization powers and enable faster depositor payouts Excluding RCF costs, the proposal represents a nominal £6.6 million reduction and £11 million real-terms reduction on a like-for-like basis to the 2025/26 budget. Carryover adjustment: The FSCS expects a £2.5 million underspend from 2025/26, which will offset levy contributions for relevant classes in 2026/27.

Published 31 March 2026 | United Kingdom

AI Analysis

The PRA has finalized the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) for 2026/27 at £113 million, effective April 1, 2026. This policy statement confirms the proposed budget following consultation, establishing the maximum amount that FSCS-levy-paying firms must fund for the compensation scheme's operating costs, with implications for all PRA and FCA-authorized firms across banking, insurance, and investment sectors.

Key dates

13 January 2026: - Consultation Paper CP1/26 published
10 February 2026 Deadline: - Consultation deadline
31 March 2026: - Policy Statement PS8/26 issued
1 April 2026: - MELL 2026/27 effective date; FSCS financial year begins
31 March 2027: - MELL 2026/27 expires; FSCS financial year ends

Suggested considerations

*Immediate compliance actions for affected firms:
*Budget planning: Incorporate the £113 million MELL into financial forecasting and levy allocation models for the 2026/27 financial year (April 1, 2026 onwards)
*Levy calculation: Ensure systems are updated to reflect the new budget allocation across PRA and FCA funding classes (detailed in Appendix 4 of CP1/26)
*Reserve provisioning: Account for the £5 million unlevied reserve in contingency planning, recognizing FSCS may levy additional funds at short notice for unforeseen costs
*RCF cost allocation: Confirm whether your firm is subject to the expanded RCF cost allocation (particularly relevant for credit unions, which raised concerns during consultation)
*Accounting treatment: Update financial statements and regulatory reporting to reflect the new levy obligations effective April 1, 2026

What changed

The final MELL for 2026/27 comprises:
Management expenses budget: £108 million (£4.4 million increase from 2025/26, broadly in line with inflation)
Unlevied reserve: £5 million (for unforeseen costs without requiring further consultation)
Total MELL: £113 million Budget allocation details:
Investment budget: £5.5 million (10% increase from 2025/26) supporting the FSCS' new five-year strategy launching in 2026/27
Strategic initiatives: Eight programs including improvements to advice claims handling, depositor and policyholder outcomes, risk management, and cybersecurity operations

Compliance impact

Urgency: HIGH

Who is affected

*Direct compliance obligation: All PRA and FCA-authorized firms that pay FSCS levies, including:
Banks and credit institutions
Insurance firms and intermediaries
Investment firms and asset managers
Payment service providers
Credit unions (with specific consideration regarding RCF cost allocation)
*Scope: The policy statement explicitly states it is "relevant to all FSCS levy-paying PRA and FCA authorised firms" and contains no material requiring action by retail consumers or consumer groups.

*Regulatory background and related developments
*RCF expansion rationale
*Proportionality framework
sharing, particularly for smaller firms and credit unions.
*Consultation feedback
*Strategic investment

References

AI-generated analysis. May contain errors or omissions — verify with the original PRA source before acting. Full disclaimer.

What the PRA said

Policy statement 8/26

Published by PRA . Read the full notice at the source for the authoritative text.

Sectors

Banking & Credit Insurance & Pensions Investment Management

Topics

Consumer Protection / Conduct Prudential / Capital Requirements Reporting & Disclosure

Relevant Firm Types

BankInsuranceAsset Manager

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