Over the 2010/2011 period the UK’s Financial Services Compensation Scheme (FSCS) received nearly 39,500 claims. This was an increase of 25% on 2009/2010.
Enquiries to the FSCS also increased by a factor of 75% and the FSCS decided more than 47,000 cases, twice more than in 2009/10.
According to its annual reportthe FSCS has paid out compensation to the tune of Â£535 million.
Â£214 million was paid out to the victims of the high profile Keydata Investment Services Limited failure alone.
The FSCS has also seen a rise of over 20% in claims relating to Payment Protection Insurance and expects this to continue into the next year.
Although firms are required by law to pay out compensation within 20 days, the FSCS are working toward their own target of 7 days and the ‘vast majority’ it says are compensated within 48 hours.
Investment in IT over the year has helped the FSCS to deal with claims more speedily says the report.
The FSCS Chief Executive, Mark Neale, said in the press release: ‘‘During 2010/11 the Financial Services Compensation Scheme faced another challenging year of increasing claims volumes and maintained its focus on protecting consumers. We made substantial strides during the year in providing an even better service to consumers and the industry and will be building on this during 2011/12.”
“Our successes in 2010/11 reflect the hard work and investment we are making to strengthen the organisation as we prepare to meet the demands of the future as well as our work with the industry on a range of fronts. The FSCS continually strives to find innovative solutions better to serve consumers while saving costs to the levy payers.”
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The FSCS also recovered a total of Â£1.79 billion from the failed banks.
With the cost of running the FSCS at Â£37 million for the year it was above its projected budget of Â£32.7 million but this was put down to the higher than expected claims workload.
The organisation has identified that there is a link between awareness of the FSCS and peoples’ confidence in financial products. Or could this could be that people would be more likely to take a risk if they thought their potential losses were covered anyway?
But the awareness advertising campaign the FSCS ran had not had the impact expected, so the approach would be reviewed.
The FSCS is an independent financial services compensation fund set up by statute. The current FSCS compensation limits can be found here.