FSCS' third decade

The 2020s will see FSCS enter its third decade.  I have been its Chief Executive for most of its second.

You may, therefore, think there is some mild irony in an outgoing CEO launching a strategy – FSCS into the 2020s – Protecting the Future – which will (I hope) long out-last him.

But perhaps that’s not so surprising when you consider that any strategy necessarily is about continuity as well as change.

That is certainly true of FSCS.

Our mission is enduring: to provide a trusted compensation service for consumers which raises public confidence in the financial services industry.

There is continuity too in the key stakeholders with whom we have engaged closely in developing this strategy.

Consumers continue to want the assurance FSCS provides and good information about what we protect to inform their decisions about what financial services to buy.

Our customers continue to want a fast, accurate and easy to use service, delivered with empathy for their often difficult circumstances.

The industry, which funds FSCS, continues to want us to be efficient, to maximise recoveries from failed firms and to work harmoniously with the regulators to prevent future failure.

And government and the regulators continue to want assurance that FSCS is resilient in the event of major failures or another crisis.

Our strategy reflects, and seeks to balance, the interests of all our stakeholders.

Unsurprisingly, this results in much continuity of focus for FSCS as we enter the 2020s.

Preparedness remains a priority.  We must maintain and enhance our capacity to return deposits in a failing bank, building society or credit union within 7 days. 

We also want to work with the regulators to improve the speed with which FSCS can protect consumers when insurance and investment businesses fail.  Key here will be bringing about improvement in the quality of information about policy holders and investors.

Another continuing priority – perhaps the top priority – will be to continue to improve the service we provide to our customers.  FSCS’ credibility, after all, depends on the quality of our service. 

So we want to build on the on-line application service – now used by over 90% of our customers – by exploiting digital technology to provide better information about the progress of claims.  And we want to draw on the resources and know-how of our partner, Capita, to cut the end-to-end time taken to handle claims and to reach decisions, as well as to improve the experience.

In short, we want to put our customers back on track, with renewed confidence in financial services.

So there is much continuity informing our strategy, but also a clear-sighted recognition of new challenges and opportunities.

We recognise that customer expectations are rising.  FSCS does not aspire to be at the cutting edge of technology, but we do need to keep pace if our service is to meet those expectations.

With further investment in technology will come new cyber security and other challenges.

We see the growing complexity of decisions facing consumers, particularly following the advent of pension freedoms,  as a challenge for FSCS.    That complexity is not matched by any equivalent growth in consumers’ financial competence or interest.

This places an increased onus on raising awareness of FSCS protection.  We know from research we have commissioned that consumers’ propensity to save for retirement is higher when they are confident about FSCS protection.  Their choice of investment is also influenced by understanding of FSCS protection.

And the growth of pension claims in recent years also points us to the need for FSCS to work more closely with the regulators and the industry to prevent failure, particularly the failures brought about by mis-selling.

This will require better foresight, faster reactions as new risks emerge and much more systematic collation and transmission in intelligence about the directors and advisers involved in mis-selling. 

We must reduce the risk that incompetent or plain bad advisers re-invent themselves and impose new losses on new consumers.

So these continuities and changes add up to the four pillars of our strategy: Prepare, Protect, Promote, Prevent.

As we enter our third decade, we want to be well-prepared for future failures of whatever size. 

We want to be known and trusted for protection that puts people back on track through outstanding customer experience. 

We want the full range of FSCS protection to be better known and trusted. 

And we want to collaborate with the regulators and industry to prevent future failure.