In this Policy Statement we report on the main issues arising from Consultation Paper 15/40: Financial Services Compensation Scheme:changes to the Compensation sourcebook, and publish the final rules.
Why are we publishing this policy statement?
In November 2015, we consulted on changes to some of the rules in our Compensation sourcebook (COMP) that govern the operation of the Financial Services Compensation Scheme (FSCS). We proposed the following:
- an increase in the non-investment (general and pure protection) insurance mediation compensation limit from 90% to 100% for claims in relation to certain types of insurance
- changes to the eligibility of trustees of occupational pension schemes to claim on the FSCS
- changes to make express reference to how the compensation rules apply where a successor firm is in default or to assist the FSCS in handling claims
We proposed to make these changes ahead of the review of the FSCS funding model and compensation limits later this year. As we explained in our Consultation Paper, this was because the changes have no impact on that review, will provide benefits to consumers and the FSCS and will, we anticipate, have minimal cost implications for levy payers. The new rules will support our consumer protection objective.
We received responses from 14 firms or representative bodies, providing around 70 comments on the nine questions we asked.
Our proposals received support from a large majority of the respondents, and we set out details in respect of each proposal and our responses in Chapter 2 of the document. The instrument does not differ significantly from the consultative draft.
Who should read this paper?
This Policy Statement will be of interest to:
- authorised financial services firms
- trade bodies representing authorised financial services firms
- bodies representing consumers
- persons that have assumed responsibility for the liabilities of an authorised financial services firm, or will do so in the future
Our new rules will be of interest to retail consumers and consumer groups because they change the compensation arrangements available to consumers under the FSCS. Of particular interest will be the:
- increase in compensation in relation to some types of non-investment (general and pure protection) insurance mediation claims
- changes regarding trustees of occupational pension schemes who are eligible to claim compensation
The changes contained in the rules that form part of this Policy Statement will come into effect on 29 April 2016.
Firms should read our final rules and take action to ensure they understand them and, in particular, the changes that we have made in relation to FSCS protection. Firms should also ensure that they deal with the FSCS in an open, cooperative and timely way.