To receive free, real-time news alerts sent directly to your inbox, sign up for our breaking news emails

Sign up for our free news emails

Sign up for our free news emails

A financial rescue package is expected to pay £367 million in compensation in 2025/26.

The Financial Services Compensation Scheme (FSCS), which released its updated outlook, said the forecast total would be similar to 2024/25, when £372m is expected to be paid out.

The FSCS is the UK’s compensation system which protects customers of licensed financial services companies if they go bankrupt or cease trading.

The products it protects include deposits held at banks, building societies and credit unions, investments, pensions, insurance and funeral insurance.

The FSCS is funded by the financial services sector. Companies pay an annual fee to finance the service.

The levy for the 2024/25 financial year remains as forecast in May at £265 million, with no further levies expected for the remainder of the current financial year, the body said.

However, the levy for 2025/26 is expected to be higher than this year, at £394 million, with lower surpluses carried forward, the FSCS said.

Surpluses occur when FSCS costs are lower than expected. For example, when fewer businesses than expected went bankrupt during the coronavirus pandemic, compensation costs were lower than expected. This can also happen when more money than expected is collected from businesses.

Martyn Beauchamp, acting chief executive of the FSCS, said: “Although the levy is expected to increase in 2025/26, as outlined in previous forecasts, cash surpluses have kept the levy below pay levels in both recent years, while we have recorded significant surplus balances at the start of each year in certain classes. This is no longer the case for 2025/26.

“During the next financial year, our new operating model will be fully integrated. At the same time, we are always looking for ways to further improve our claims processes, working hard to find efficiencies without significantly increasing costs.