Reformed compensation scheme revealed
The Financial Services Authority has confirmed the future funding arrangements for the Financial Services Compensation Scheme which will operate from 1 April 2008.
The new funding system will considerably increase the funding available to pay valid claims to consumers, be more robust and sustainable than the present arrangements, promote greater consumer protection and help maintain market confidence through financial stability.
It will also apportion the cost of compensation between regulated firms as fairly as possible and be simpler to administer.
FSA director Graeme Ashley-Fenn said: “An effective system for compensating consumers for losses incurred when a financial services company fails is a vital part of the regulatory system. The new model is more rational, fairer to the various players in the market and provides greater levels of funding. It will be capable of meeting current issues, such as endowment mis-selling, and will now also provide compensation for any future potential, and unexpected claims.”