FSCS
The Financial Services Compensation Scheme (FSCS) is a UK law Deposit insurance and investor compensation scheme for customers of the formal financial services industry.
This means that the FSCS can pay compensation if the industry is unable, or most likely unable to pay claims. The FSCS is an independent operating body, established under the Financial Services and Markets Authority (FSMA) Act 2000, and funded by a levy on the formal financial services industry. The provisions of the FSCS scheme are made by the Financial Attitude Authority (FCA) and are in the FCA Handbook. The FCA also appoints its Board and the FSCS is ultimately accountable to the FCA. Schemes include deposits, insurance policies, insurance brokers, investments, mortgages as well as mortgage arrangements.
The FSCS was formed in 2001. Between 2001 and 2006, the scheme paid nearly 1 billion pounds in compensation. In the period from 2006 to 2011, the financial crisis caused compensation of more than £26 billion to be paid by the FSCS. In 2008, the FSCS was granted a loan by the Bank of England to guarantee customer deposits; Bingley. The compensation limit was last changed in 2010 to be in line with the EU (as well as EEA) deposit guarantee requirements based on EU directive 94/19/E.
On 31 August 2012, UK official banks, development agencies, and credit unions were asked to provide data on FSCS protection at branches and online, this included posters and window stickers. This action explores the introduction of a new Financial Services Authority (FSA) provision that requires deposit recipients to show data on existing FSCS protections for consumers. British foreign bank branches of the European Economic Area (EEA) must ensure that their customers are not covered by the FSCS and report which national scheme provides protection.
On January 14, 2013, FSCS launched a consumer awareness program aimed at reassuring consumers and increasing confidence, thereby helping financial stability. It explores the disclosure requirements and uses the protection icon to engage with consumers and highlights the security that the FSCS provides for savings and deposits. The advertising program is scheduled to appear in the national press, radio, online, and digitally.
FSCS is free for consumers, since 2001, and has helped over 4.5 million people and paid out over £26 billion. Since 31 December 2010, maintaining a single customer interface has become a must for UK banks and other deposit recipients due to the new provisions introduced by the FSCS.