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FSCS pays out £535 million in compensation

FSCS pays out £535 million in compensation

Category: Money

Updated: 01/07/2011
First Published: 01/07/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Financial Services Compensation Scheme (FSCS) paid out compensation to the tune of £535 million in 2010/11.

The scheme ensures that savers and investors are paid out if their providers go bust.

FSCS said that it had seen an increased number of claims, including those for high profile failures such as Keydata.

It received close to 39,500 new claims from consumers, an increase of 25% on the previous year and decided more than twice the number of claims (more than 47,000) it did in 2009/10.

There was an increase of 75% in the numbers of enquiries received, a total of 167,600.

The failure of Keydata continued to dominate the work of the FSCS during 2010/11. as more than 27,000 claims arising from the Keydata failure were resolved and £214 million was paid out to investors.

There was also a rise in the number of Payment Protection Insurance (PPI) claims, which accounted for just over 20% of new claims.

The trend of growing PPI claims is expected to continue into 2011/12.

''During 2010/11 the Financial Services Compensation Scheme faced another challenging year of increasing claims volumes and maintained its focus on protecting consumers," Mark Neale, chief executive, said.

"We made substantial strides during the year in providing an even better service to consumers and the industry and will be building on this during 2011/12.

"Our successes in 2010/11 reflect the hard work and investment we are making to strengthen the organisation as we prepare to meet the demands of the future as well as our work with the industry on a range of fronts.

"The FSCS continually strives to find innovative solutions to better serve consumers while saving costs to the levy payers."

The scheme also said that it is succeeding in its aim to cut the amount of time people wait for their compensation.

Despite an official limit of 20 days before payments, the FSCS's own target for paying consumers is within seven days of a bank, building society or credit union going bust.

Following the defaults of three credit unions in January 2011, the FSCS paid the vast majority of members within 48 hours and the balance of straightforward claims within seven days.

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