March 26, 2019, | AtoZ Markets - The UK Financial Services Compensation Scheme (FSCS) has recently provided the latest date of the recoveries made over the past several years. According to the report, UK FSCS compensations reached £20 billion since 2008
UK FSCS in a brief
The UK Financial Services Compensation Scheme is independent of the government and financial services industry. The FSCS acts as a UK consumer protection control body.
- Since 2011 UK FSCS compensations reached over £60 million
- The organization has returned £375 million from other recoveries to the industry in the last five years.
- FSCS was set up in 2001 under the Financial Services and Markets Act 2000.
The group has played an important role in assisting affected investors through compensation since it was set up. The scheme covers deposits, insurance policies, insurance brokers, individual investments, mortgage loans, and mortgage processing. The enforcement action is a legal claim that FSCS makes in order to receive the compensation it has paid to customers, whether in the framework of a formal insolvency process, a court proceeding or any form of dispute resolution.
UK FSCS plan and budget for 2019/20
Over the past five years, the FSCS reimbursement costs rose from £ 375 million in the previous year, as the scheme claims that handling became more efficient as part of its online service. About 92 percent of claims are now filed online.
In January of this year, the body published its plan and budget for 2019/20. FSCS expects to levy £ 516 million from the industry for 2019/20 - a 12-month period compared with the 468 million pounds sterling that FSCS collected from firms for the nine-month collection period from 2018/19 (from July 2018 to March 2019).
To reduce the cost of compensation for its payers, FSCS seeks to recover the amounts paid as compensation from any party that, in its opinion, is legally liable. As part of the compensation process, the legal rights of customers are transferred to FSCS. FSCS then “stands still” for these customers, taking any recovery actions.
UK FSCS recovers entirely
In today's report, the FSCS, which is regulated by the Prudential Regulatory Office and the Financial Conduct Authority, said it fully paid the government back the money it borrowed to finance UK FSCS compensations in 2008 when the organization had to borrow about $ 20 billion from the government during the financial crisis.
Almost eleven years ago the organization paid almost £ 20 billion to protect the victims of the 2008 financial crisis, and the cost of a Bradford and Bingley failure was 15.65 billion pounds. Recently, the FSCS has been involved in a number of large and complex recovery cases.
A striking example is litigation on the PPI, which includes litigation against many lenders on the undisclosed and excessive commissions under the agreements on the PPI, resulting in compensation of just under £ 20 million.
UK FSCS opinion on the organization’s activity
Commenting on the activities of the organization, Mark Neal, FSCS CEO, said: “Recovery is an integral part of the vital work of FSCS aimed at compensating customers and promoting trust in financial services. I am very proud of the professionalism of our recovery team in dealing with complex cases to successful results. Recovery will play an important role in our new strategy for the 2020s. ”
James Darbyshire, FSCS General Counsel, who oversees FSCS reinstatement work, added: “The usual recovery paths we seek include actions against default firms and their Professional Indemnity insurers. However, we are increasingly taking increasingly difficult measures to recover damages, and in these cases, we tend to use our group of law firms that have both experience and jurisdiction to help us. ”
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