Failed financial services firms paid a hefty £300 million for the Financial Services Compensation Scheme (FSCS) over the past five years.
The lifeboat scheme also revealed that it paid out nearly £20 billion to protect victims of the 2008 financial crisis, with the cost of Bradford & Bingley’s failure alone was £15.65 billion. The FSCS, which is regulated by the Prudential Regulation Authority and the Financial Conduct Authority, said it repaid the government in full the money it borrowed in to fund the compensation payments.
The FSCS operates as a watchdog authority, protecting consumers in the UK. The group has been instrumental in assisting affected investors with compensation since 2001, having solidified itself as one of the most trusted names in the UK. The scheme covers deposits, insurance policies, insurance brokering, selected investments, mortgages and mortgage arrangement.
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The rising tide of online claims
Compensation costs climbed from £375 million in the year prior as the scheme said claims handling had become more efficient under its online service. Some 92 percent of claims are now submitted online.
Commenting on this, Mark Neale, CEO of FSCS, said: “Recoveries are an unsung part of FSCS’s vital work of compensating customers and contributing to confidence in financial services. I am very proud of the professionalism of our Recoveries Team in navigating complex cases to successful outcomes. Recoveries will play an essential role in our new strategy for the 2020s.”
James Darbyshire, FSCS’s General Counsel, who leads on FSCS’s recoveries work, added: “The usual avenues of recovery we pursue include actions against the firms we’ve declared in default, and their Professional Indemnity insurers. Increasingly, however, we are taking ever more complex recoveries action, and in those instances we tend to make use of our panel of law firms, who have both the expertise and jurisdictional reach to assist us.”