20 March 2007
FSA reform compensation scheme
The Financial Services Authority (FSA) is to reform its scheme whereby compensation is paid to customers who have fallen victim to mis-selling of endowment policies.
The Financial Services Compensation Scheme (FSCS) is to be remoulded to afford greater protection to people who have lost money from financial services companies who cannot pay the client what they owe them.
It is proposed that the amount the scheme can pay out will be increased to £4.4 billion per annum and that five classifications will be introduced to facilitate the processing of claims.
John Howard, chairman of the Financial Services Consumer Panel, told Reuters: "Knowing the FSCS provides a lifeboat for clients if a financial provider or adviser sinks without trace, helps to boost consumers' confidence in financial services.
"The new proposals will create a fairer system. The most important thing for consumers is that the FSCS is financially strong and administratively efficient and that's what these proposals should achieve."
Currently, the maximum the FSA can pay out to injured parties is £48,000.