We are consulting on proposals to change how the FSCS is funded and to increase the protection it provides to consumers.
This consultation paper follows CP16/42 (PDF) published in December 2016 which sought views on how FSCS funding could be reformed. Our ongoing review seeks to ensure the FSCS continues to provide the right protections, works effectively and is funded fairly. Following the feedback received we are now consulting on the following proposals:
We are also consulting on increasing the FSCS compensation limit for investment provision, investment intermediation, home finance and debt management claims to £85,000.
This paper also contains the final rules for changes to FSCS funding which were consulted on in December 2016. This includes:
We are also seeking views on other options for reducing harm to consumers. These options are intended to give firms incentives not to carry out activities which have led to FSCS claims in recent years, and also to reduce the value of claims the FSCS has to meet. We are considering requiring certain Personal Investment Firms (PIFs) – particularly those with exclusions on their Professional Indemnity Insurance (PII) policy - to pay money into a trust account or purchase a bond that would ensure more claims are paid for by firms or their insurers.
This consultation paper will be of interest to all firms, whether they are current or potential contributors to FSCS funding, and to consumers, or consumer groups.
This consultation is now closed. We expect to publish a Policy Statement in the first half of 2018. It will contain:
Rules consulted on in the paper will be made in time for implementation in the 2019/20 financial year.