Friday 25 Jul 2008 @ 10:32
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FSCS handles 22,000 claims and contains costs during 2007/08, according to annual report
The Financial Services Compensation Scheme (FSCS) improved its service to consumers while cutting its costs during 2007/08, according to its annual report out today. At the same time, the Scheme passed the billion pound mark in compensation paid to consumers.
FSCS and the financial services industry faced enormous challenges in 2007/08, says the report. It was a year in which the markets suffered their worst turmoil in recent years. Despite this, FSCS made over 9,450 payments for insurance claims and completed close to 22,000 other claims, reduced waiting times for consumers and paid more than £82m in compensation. That brought the total amount of compensation paid by FSCS since it was set up to more than £1.04 bn.
FSCS received fewer claims overall during 2007/08 than originally projected. Most notably mortgage endowment and pension review claims – both major drivers of the Scheme’s work in recent years - continued on a downward trend. Following this reduction in the volume of claims, FSCS was able to contain its costs and ended the year under budget by some £6m.
The Scheme ended the year achieving its core target of completing 90% of new claims within six months of receiving an application for compensation. It bettered this considerably in some areas, such as credit union claims, where it completed more than 96% of claims within two weeks, according to the report.
At the same time, efforts to focus on the consumer paid real dividends during 2007/08. By 31 March 2008, fewer than 8% of claims in the FSCS “work-in-progress” were more than six months old. This contrasts with 28% of claims being more than six months old as at 31 March 2007.
Loretta Minghella, Chief Executive of FSCS, said: “2007/08 was a year of challenges and achievements for FSCS. Away from the spotlight on the banking sector, we were dealing with a diverse portfolio of compensation claims across the industry. Despite the demands of the turbulent environment, it was a year in which FSCS improved its service to consumers and contained costs for levy payers, reinforcing our commitment to being as efficient and effective as possible.
“We completed some of the most complex and longstanding claims on our books, while also processing new claims within our target times, all well under budget. That is good news for consumers and good news for the industry.”
Figures released by FSCS show that in the financial year to 31 March 2008:
• It received 16,490 claims and completed 21,960.
• FSCS streamlined claims’ administration to allow payments to members of failed credit unions within days.
• FSCS expenses were £6m under budget for the year after cost-saving measures and a lower than expected volume of claims.
• Only 7% of claims were older than six months by the end of the year; FSCS handled more than 96% of credit union claims within two weeks.
• It made £20m in recoveries which helped to offset the £82m in compensation paid.
• It paid £46m for general insurance claims, making over 9,450 insurance compensation payments.
• Mortgage endowment claims continued to be biggest driver of new claims with 7,410 claims during the year.
• 3,470 splits claims were completed in 2007/08, with claims relating to two specific defaults: Exeter Fund Managers Ltd and BFS Investments Plc.
• FSCS has paid out £1.04bn in compensation to consumers since it was set up in 2001.
The Annual Report and Accounts: 2007/08 can be downloaded from: http://www.fscs.org.uk/industry/publications/industry/
Press Enquiries:
Mark Oakes 0207 892 7370 mark.oakes@fscs.org.uk
The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation scheme for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA). Its service is free to consumers.
FSCS and the financial services industry faced enormous challenges in 2007/08, says the report. It was a year in which the markets suffered their worst turmoil in recent years. Despite this, FSCS made over 9,450 payments for insurance claims and completed close to 22,000 other claims, reduced waiting times for consumers and paid more than £82m in compensation. That brought the total amount of compensation paid by FSCS since it was set up to more than £1.04 bn.
FSCS received fewer claims overall during 2007/08 than originally projected. Most notably mortgage endowment and pension review claims – both major drivers of the Scheme’s work in recent years - continued on a downward trend. Following this reduction in the volume of claims, FSCS was able to contain its costs and ended the year under budget by some £6m.
The Scheme ended the year achieving its core target of completing 90% of new claims within six months of receiving an application for compensation. It bettered this considerably in some areas, such as credit union claims, where it completed more than 96% of claims within two weeks, according to the report.
At the same time, efforts to focus on the consumer paid real dividends during 2007/08. By 31 March 2008, fewer than 8% of claims in the FSCS “work-in-progress” were more than six months old. This contrasts with 28% of claims being more than six months old as at 31 March 2007.
Loretta Minghella, Chief Executive of FSCS, said: “2007/08 was a year of challenges and achievements for FSCS. Away from the spotlight on the banking sector, we were dealing with a diverse portfolio of compensation claims across the industry. Despite the demands of the turbulent environment, it was a year in which FSCS improved its service to consumers and contained costs for levy payers, reinforcing our commitment to being as efficient and effective as possible.
“We completed some of the most complex and longstanding claims on our books, while also processing new claims within our target times, all well under budget. That is good news for consumers and good news for the industry.”
Figures released by FSCS show that in the financial year to 31 March 2008:
• It received 16,490 claims and completed 21,960.
• FSCS streamlined claims’ administration to allow payments to members of failed credit unions within days.
• FSCS expenses were £6m under budget for the year after cost-saving measures and a lower than expected volume of claims.
• Only 7% of claims were older than six months by the end of the year; FSCS handled more than 96% of credit union claims within two weeks.
• It made £20m in recoveries which helped to offset the £82m in compensation paid.
• It paid £46m for general insurance claims, making over 9,450 insurance compensation payments.
• Mortgage endowment claims continued to be biggest driver of new claims with 7,410 claims during the year.
• 3,470 splits claims were completed in 2007/08, with claims relating to two specific defaults: Exeter Fund Managers Ltd and BFS Investments Plc.
• FSCS has paid out £1.04bn in compensation to consumers since it was set up in 2001.
The Annual Report and Accounts: 2007/08 can be downloaded from: http://www.fscs.org.uk/industry/publications/industry/
For more information about FSCS see Notes to Editors section or visit www.fscs.org.uk
Press Enquiries:
Mark Oakes 0207 892 7370 mark.oakes@fscs.org.uk
Sarah McShane 020 7892 7882 sarah.mcshane@fscs.org.uk
Suzette Browne 020 7892 7372 suzette.browne@fscs.org.uk
Notes to Editors:
The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation scheme for customers of authorised financial services firms. This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA). Its service is free to consumers.
