Have you ever thought about what would happen if the bank or building society that you were holding your life savings with suddenly went out of business?
What would happen to those savings? Would you get your money back? And how?
Since 2001 the Financial Services Compensation Scheme (FSCS) has been there for this very eventuality, recovering large sums of money for people all over the UK.
Who are the FSCS?
Set up as a result of the Financial Services and Markets Act 2000 the FSCS is an independent body that serves customers of UK authorised financial services firms.
They are funded by those same institutions in the form of an annual levy, something that is required from any firm wishing to become authorised. The amount they pay varies according to the size of the firm, and is broken down further into five main product categories – Deposits, Life & pensions, Insurance, Investments and Home Finance. The indicative annual levy for all categories this financial year is £363m.
In the 15 years since its inception the FSCS has helped over 4.5m people and paid out billions of pounds in compensation, with £327m being paid out in 2014/15 alone. Consumers can claim back up to £75,000 depending on product type.
The FSCS predicts that they will receive more than 19,000 new claims in the current financial year, with almost 20% of those coming from the Insurance sub-category that includes Payment Protection Insurance (PPI).
How do they work?
The FSCS begin their claims by looking into a financial firm and determining whether or not that firm is in default, and as such will be unable to pay out against any claims.
Once the firm is declared in default by the FSCS, they will then begin taking application forms from consumers. These forms give the FSCS authority to collect information on the consumer’s behalf as well as giving them all the necessary details about the type of claim.
After reviewing the case the FSCS will then inform the consumer of their decision in writing, and award compensation where applicable.
In the FSCS plan for the 2016/17 financial year, Chief Executive Mark Neale said in his overview that the ‘great majority’ of customers had their deposit claims paid within seven days.
When dealing with Investment firms, Insurance brokers and Mortgage brokers, cases are typically more complicated and the FSCS therefore aims to resolve these cases within six months.
How does The Fair Trade Practice work with the FSCS?
In our efforts to claim back PPI compensation for our customers here at The Fair Trade Practice, we do come across cases with firms who are no longer trading or whereby it is unclear who the underlying broker is.
When these complex cases arise, we use our experience in dealing with such claims to work with the FSCS and ensure our customers receive any financial award they may be due.
If your claim with us needs the attention of the FSCS, we will ensure all the relevant details and information is provided to you, and keep you updated at every stage of the process.