Compensation claims hit £1 billion
More than £1 billion of compensation has been paid out to financial consumers in the past seven years, £82 million of which was distributed during 2007/08.
Figures from the Financial Services Compensation Scheme’s (FSCS) from the past year reveal it received 16,490 claims, the vast majority of which related to investments such as mortgage endowments. Despite the current turbulent climate, the number of complaints was actually down 33% from the previous year.
However, the FSCS saw a 160% increase in the number of complaints against failed deposit-taking firms, such as credit unions, a 214% increase in insurance mediation claims, and a whopping 400% increase in home finance claims.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).