FSCS compensation payouts top £1bn over seven-year life

Published on Friday 25 July 2008 19:54

THE Financial Services Compensation Scheme (FSCS) has paid out over £1 billion since it launched in 2001, it has revealed.

But, in its annual report, the FSCS reported that, while the 82 million paid out in the 2007-8 financial year took its total payments to 1.04bn, there was a fall in the number of claims during the year.

Mortgage endowment claims accounted for the biggest proportion of the 22,000 claims it handled over the year, with 7,410 claims at an average payment of 1,800.

But the downward trend in claims relating to problems with mortgage endowments and pension reviews continued.

Completed claims for compensation from investors who lost money in split-capital investment trusts totalled 3,740, the payouts relating mostly to two defaulted companies, Exeter Fund Managers and BFS Investments.

The FSCS said that, despite the difficult prevailing economic climate, it made more than 9,450 payments for insurance claims and reduced payout waiting times for consumers.

It said that it completed nine out of every ten claims submitted to it within six months of receiving an application for compensation and less than 8 per cent of claims in progress were more than six months old.

"Away from the spotlight on the banking sector, we were dealing with a diverse portfolio of compensation claims across the industry," said Loretta Minghella, chief executive of FSCS.

"Despite the demands of the turbulent environment, it was a year in which the FSCS improved its service to consumers and contained costs for levy payers, reinforcing our commitment to being as efficient and effective as possible."

Minghella added: "That is good news for consumers and good news for the industry."