Over 300 million pounds was paid for the FSCS, the Financial Services Compensation Scheme, over the last five years by financial services firms that had failed.
It was also revealed that the lifeboat scheme has paid out almost 20 billion pounds to protect people who fell victim to the 2008 financial crisis. The cost of the Bradford & Bingley failure made up the lions share of these payouts, coming in at 15.65 billion pounds. Regulated by the Prudential Regulation Authority and the Financial Conduct Authority, the FSCS said that it had repaid the government in the total amount of the money that it had borrowed to fund compensation payments.
The FSCS operates as the UK’s watchdog, helping people with compensation since 2001, and it is now one of the most trusted names in the UK when it comes to the financial sector. The scheme itself covers a wide variety of financial services. These are deposits, selected investments, insurance policies, insurance brokering, mortgages and mortgage arrangement.
Online claims increasing efficiency
Cost of compensation climbed from the previous where they had been 375 million pounds. FSCS has said that its new online claims system has brought efficiency to new levels and that currently around 92% of all claims are being filed using their online system.
Mark Neale, the CEO of FSCS, recently said that in his opinion “recoveries are an unsung part of FSCS’s vital work of compensating customers”, adding that this is the work that gives FSCS it’s greater contribution to the financial system as a whole by increasing the confidence in the system of the average consumer.
He added that he feels great pride at the professionalism that is shown by the Recoveries Team, particularly when it came to navigating complex cases to a successful outcome. He finished off with saying that recoveries will, in his opinion, play a critical role in the strategy of FSCS for the 2021s.
This was echoed by James Darbyshire, the general counsel for the FSCS. Darbyshire is in charge of leading the recoveries process and added the following tidbits to what Mark Neale had already said. He said that while the usual course of action pursued in a recovery included actions against the firm or firms that they had declared in default, including the Personal Indemnity insurers of those firms, that there was an extra detail that was due to the increasingly complex recoveries.
He said that in those instances, FSCS made use of a special panel of law firms that would help with specialized research and workflow. Those firms would have not only specialized expertise but also greater jurisdictional reach that the FSCS didn’t have itself.
The 300 million pounds collected in the last 5 years, just goes to show how much their use of specialized panels with extra jurisdictions and specialized research has helped the process of recoveries.