FCA has published a discussion paper on the purpose, scope and funding of the compensation framework. It notes that the FSCS levy has increased over the last 10 years, by nearly £500m to an expected £717m for 2021/22. Many of the claims that drive these costs relate to historic misconduct by investment firms, and this pipeline is expected to continue. FCA wants to stabilise and reduce the size of the levy and is taking significant action to improve conduct and financial resilience of firms.
The paper looks at the history of the FSCS and seeks views on:
- what regulated activities should be protected under it?
- who should be eligible to claim compensation under it?
- what is an appropriate level of compensation for an individual claimant?
- can improvements be made to how the scheme is funded? and
- design principles and further opportunities for change.
Comments are due by 4 March 2022.