Compensation for consumers will be strengthened by new FSA proposals

20 March

The Consumer Panel today welcomed the latest FSA proposals for the funding of the Financial Services Compensation Scheme.

Today's proposals make the FSCS more robust and better in terms of viability and efficiency. It provides a practical option for widening funding, should there be a major failure in one area, without any sense of panic or special levy. It also spreads the costs more fairly amongst the firms operating in the appropriate sector. For example, an IFA that does 90 per cent insurance business and 10 per cent investment business will be more heavily levied if FSCS faces heavier claims in the insurance sector.

The Chairman of the Financial Services Consumer Panel, John Howard said:

"Knowing the FSCS provides a lifeboat for clients if a financial provider or advisor sinks without trace, helps to boost consumers' confidence in financial services. However the existing system of funding the scheme is a bit of a blunt instrument. 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."

Notes to editors

1. The details of the FSA's proposals (Consultation Paper 07/5), which build on Discussion Paper DP 06/01 are available on its website.
   
   

2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
   
   

3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. More information about the Panel's work is available on this website.
   
   

4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.
   
   

5. There are currently thirteen members of the Panel as listed below.

   John Howard (Chairman)
   Adam Phillips (Vice Chairman)
   Kay Blair
   Michael Chapman
   Stephen Crampton
   Caroline Gardner
   Jenny Hamilton

   Tony Hetherington
   Stephen Locke
   Nick Lord
   David Metz
   Lindsey Rogerson
   Carol Stewart