A new product levy is to be considered as part of the review of the FSCS, the FCA’s chief executive has revealed.

The regulator’s CEO Andrew Bailey has explained the move in a letter to Andrew Tyrie MP, chairman of the Treasury Committee.

Mr Bailey said the FCA was looking at “the possibility of risk-based levies related to the products or services a firm offers, its capital reserves or complaints reported”.

He said: “We are aware that some sectors of the industry are keen to fund the FSCS through a product levy, and we will be considering this proposal in our consultation.”

A number of other possible moves, Mr Bailey wrote, included changes to FSCS compensation limits. This could mean an increase to limits in certain areas, "in order to better protect consumers that manage their pension accumulation or, in particular, decumulation outside of traditional life insurance products".

The FCA is looking at the relationship between FSCS funding and the professional indemnity insurance held by firms, in particular whether a separate review is required of the PII market.

Other potential moves include “smoothing firms' levy contribution by, for example, merging certain funding classes or through more extensive use of the FSCS credit facility”.

Mr Bailey said: “We are also considering the role and responsibilities of product providers for the way that their products are distributed.”

Mr Tyrie said: "There has been talk of reviewing the FSCS levy since 2001, so this is not before time.

“I'm glad that the funding review is well underway, and that the scope of the review includes issues raised by the Committee, such as the unpredictable nature of the levy.”

The FCA plans to publish a public consultation paper at the end of November outlining a range of proposals to “enhance the current funding model”.

Final rules should be in place by the summer of 2017, with the new arrangements taking effect from the 2018-19 levy year, Mr Bailey said.