FEES 6.5A 1The retail pool
Allocation of compensation costs levies and specific costs levies through the retail pool
The FSCS must allocate a compensation costs levy or specific costs levy, which has been allocated to the retail pool (under FEES 6.5.2-AR(2) or FEES 6.4.6AR(2)2):
- (1)
to classes whose retail pool levy limit has not been reached as at the date of the levy;
- (2)
in proportion to the relative sizes of the retail pool levy limits of the classes in (1) and up to those levy limits2; and
- (3)
in accordance with the table in FEES 6 Annex 5R2.
[Note: The retail pool levy limits for classes other than FCA provider contribution classes are the normal levy limits for that class. See the table in FEES 6 Annex 5R2 for the retail pool levy limits for all relevant classes.]
Effect of levies under the PRA’s rules on insurers and deposit-takers in the retail pool
- (1)
An allocation in FEES 6.5A.1 R to an FCA provider contribution class other than the home finance providers and administrators' contribution class may not be of an amount that, if it were added to any levies2:
- (a)
2that correspond to the FCA’s compensation costs levies or specific costs levies; and
- (b)
2which have previously in the same financial year been imposed on the PRA funding class2 which corresponds to that FCA provider contribution class (as set out in FEES 6.5A.7R),
2the combined figure would be greater than any levy limit of the corresponding PRA funding class.
- (a)
- (2)
Where:
- (a)
an FCA provider contribution class has already contributed to specific costs or compensation costs (through the retail pool) in a financial year2; and
- (b)
if the amount of that previous contribution by the class in (a) were added to a levy that corresponds to the FCA’s2 compensation costs levy or specific costs levy and2 which is being imposed on the PRA funding class2 which corresponds to the class in (a) (and any previous such levies in the same financial year2), the combined figure would be greater than any levy limit2 of the corresponding PRA funding class2;
the FSCS must, so far as reasonably possible, obtain repayment of the previous contribution by the class in (a) from the retail pool (including the FCA provider contribution classes except the class in (a)) to the extent that ensures that the combined figure in (b) would no longer be greater than any levy limit2 of the corresponding PRA funding class2, and credit the repayment to the class in (a).
- (a)
- (3)
The FSCS may obtain the repayment in (2) by:
- (a)
a levy;
- (b)
commercial or other borrowing; or
- (c)
utilising funds as set out in, and subject to, FEES 6.3.17 R.
- (a)
In considering which of the options in FEES 6.5A.2R(3)2 to adopt, the FSCS will generally impose a levy, rather than borrow or utilise funds as described in FEES 6.5A.2R(3)(c)2, unless the latter options appear to be preferable in the specific circumstances prevailing at the relevant time.
How levy limits affect allocation to classes in the retail pool
The calculation of the relative sizes of the retail pool levy limit (for the purpose of FEES 6.5A.1 R) is based on the original retail pool levy limits for the classes (as set out in FEES 6 Annex 5) and not the remaining capacity in each class.
When the FSCS allocates excess compensation costs levies or specific costs levies under FEES 6.5A.1 R or any levy imposed under FEES 6.5A.2 R (3)(a) , a class to which part of the excess is allocated (a "receiving class") may, as a result of that allocation, itself reach its limit. In that case, the FSCS must apply FEES 6.5A.1 R or FEES 6.5A.2 R so that any resulting excess levy beyond the limit of the receiving class is allocated amongst the remaining classes whose limits have not been reached, to the exclusion of the receiving class. This process is repeated until the compensation costs levy or specific costs levy has been met in full or the limits of all classes have been exhausted.