Sarah Pritchard, executive director, markets at the Financial Conduct Authority (FCA) announced the objective in a closing keynote speech at the Personal Investment Management & Financial Advice Association (PIMFA) virtual Senior Leadership Summit yesterday.
This followed the news that the FSCS had lowered the levy for the financial year 2021/2022 from £833m to £717m.
Pritchard said the regulator was looking to stabilise the FSCS levy by 2025 as part of its transformation policy. She said the FCA was targeting “a year-on-year reduction in the levy between 2025 and 2030”.
She added that the FCA would publish a consultation paper before the end of the year, which would set out some proposals on how the levy might be stabilised.
Pritchard also said the regulator needed to work with the industry to make this happen.
“This needs a whole system response,” she added.
Liz Field, chief executive of PIMFA, said: “We welcome the announcement from the FCA that the regulator wants to work with us to stabilise the FSCS levy and work towards real world year-on-year reductions in the levy between 2025 and 2030.
“PIMFA remains absolutely clear that the current levels of FSCS funding are unsustainable for the industry and can only be addressed once the drivers of FSCS claims are suitably addressed.”
In its outlook for the year, the FSCS said it revised down the levy as it no longer required each financial services sector to contribute to a £116m pool to cover claims made against the investment provision sector. It said the claims still sat with the Financial Services Ombudsman and were expected to be processed in 2022/2023.
In response, the Association of Mortgage Intermediaries said it was ready to work with the FCA and FSCS to establish a fairer funding mechanism for the compensations scheme.