Banks' FSCS levy upped by £7.3m

The Financial Services Compensation Scheme (FSCS) levy will increase by £7.3m next year to meet the cost of the collapse of Southsea Mortgage and Investment Company, but only banks are likely to be affected by the rise.

Southsea, a small bank operating in the Portsmouth area with just 270 savers, was shut down by the Financial Services Authority and the Bank of England in June after losing money following the 2008 banking crisis.

The FSCS compensated savers £7.4m in just two days. It will now seek to recover the money from the deposit taking group of companies banded in the Scheme's SA01 sub-class.

IFAs are unlikely to be affected by the rise, an FSCS spokesperson said.

In April the FSCS announced the annual industry-wide levy for 2011/12 as £217m. The £7.3m compensation required for the Southsea default was not included in the FSCS's original calculations.