 The FSCS paid out �83m in 2007/08 |
The number of claims received by the Financial Services Compensation Scheme (FSCS) fell by 33% in the past year. The FSCS received 16,490 new claims, with nearly half relating to mortgage endowment policies. The scheme compensates people who lose money if their bank, insurance company or other financial firm goes bust. In the wake of the Northern Rock crisis last year the limit for payouts to bank customers was raised to 100% of the first �35,000 that had been lost. The government is currently consulting on plans to raise that limit further, to 100% of the first �50,000 in savings, in the hope of preventing another run on a bank if another one faces collapse in the future. Problems about obtaining compensation from firms that had sold endowment policies provided the bulk of the workload processed by the FSCS in the last financial year. It dealt with 13,625 such cases, offering payment to 45% of the claimants, worth an average of �1,800 each. Other significant sources of complaint were firms who had failed to pay compensation for mis-selling split capital investment trusts, and failed credit unions. Total payouts in 2007-08 amounted to �83m on nearly 22,000 completed cases, with the largest payments going to customers of failed insurance firms. The FSCS said that since it had been set up in 2001 it had now paid out more than �1bn to claimants. The FSCS is funded by levies on member firms in the financial services industry which are regulated by the Financial Services Authority.
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