DP21/5: Compensation Framework Review

Discussion opens
06/12/2021
06/12/2021
Deadline for comments
04/03/2022

We are launching a discussion as part of our review of the compensation framework. We want the framework to continue to provide an appropriate level of protection for consumers while being funded in a fair and sustainable way.

Read DP21/5 (PDF)

The Financial Services Compensation Scheme (FSCS) is the UK’s statutory 'fund of last resort’ for customers of authorised financial services firms. The FSCS provides compensation when certain authorised financial services firms are unable, or likely to be unable, to meet claims against them.

The FSCS’s operating costs and compensation payments are funded by levies on financial services firms. Increasing compensation costs seen in recent years have prompted questions about the fairness of FSCS levies and how the FSCS should be funded.

Our discussion paper is the start of a discussion with stakeholders on the compensation framework and the purpose, scope and funding of the FSCS. We are interested in identifying opportunities to improve the aspects of the framework which the FCA is responsible for, to ensure the framework remains appropriate and proportionate in order to benefit all market participants.

Who this applies to

This discussion paper will interest:

  • consumers
  • groups representing consumers’ interests
  • regulated firms, including FSCS levy payers
  • trade bodies for regulated firms

Respond to this discussion paper

We want to know what you think about the issues set out in this discussion paper by 4 March 2022.

Send responses via this online form or by email to: [email protected]

Online response form

Next steps

We will consider your feedback and publish a Feedback Statement during 2022 which will outline any further steps we intend to take. We also plan to engage with stakeholders directly during the first quarter of 2022, once we have had the opportunity to hear stakeholders’ initial views.