On September 27, 2016, the PRA issued a Policy Statement relating to implementing risk-based levies for the Financial Services Compensation Scheme deposits. The Policy Statement contains final rules amending the Depositor Protection Part of the PRA Rulebook and a final Statement of Policy on the Financial Services Compensation Scheme and the calculation of firm contributions to the Scheme. The final rules and Statement of Policy are relevant to UK banks, building societies, credit unions, overseas firms with PRA deposit-taking permission and the FSCS (the UK's administrator of its Deposit Guarantee Scheme). The rules applied from October 1, 2016.
Prior to the introduction of the recast Deposit Guarantee Schemes Directive, the FSCS was required to calculate firm levies on the basis of covered deposits. The recast DGSD provides that contributions to a deposit guarantee scheme should also be adjusted relative to the risk incurred by each member of the scheme. The EBA issued Guidelines detailing methods for calculating contributions to schemes. The PRA's rules and Statement of Policy take into account the EBA Guidelines and set out the methodology for calculating risk-based levies and their application to the repayment of current and future compensation costs incurred by the FSCS. The methodology uses different calculations depending on the category of firm: CRR firm, credit unions and non-European Economic Area branches. The PRA has made some changes to the rules that were initially proposed in its consultation paper in March 2016, including removing legacy cost levies from the risk-based methodology and making technical amendments to the calculation methodology for credit unions.
The PRA's Policy Statement is available at: http://www.bankofengland.co.uk/pra/Documents/publications/ps/2016/ps2516.pdf , the PRA's Statement of Policy is available at: http://www.bankofengland.co.uk/pra/Documents/publications/sop/2016/calculatingrbl.pdf and the PRA's final rules are available at: http://www.bankofengland.co.uk/pra/Documents/publications/ps/2016/ps2516app1.pdf.
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