Holding to account
A business’ annual report and accounts can only usually be reached after multiple clicks on a website, buried somewhere in the pages headed 'About us' or something similar.
In my experience, there is a huge disproportion between the time and energy involved in compiling, writing and publishing an annual report and the exposure the report then receives. The reality is that too often annual reports are read with close attention by those applying for jobs.
This is a pity because FSCS has multiple and important stakeholders and our annual report speaks to all of them.
The people who use our service – we view them as customers – will find in our annual report information about the steps we have taken to improve our service to them.
We know, for example, that many customers can find the process of dealing with their claim long-drawn out and complex, especially if we have to seek evidence from other organisations.
So our Annual Report describes how our online claims process makes it easier for customers to check their eligibility and complete a claim accurately first time And the report describes how we have improved our communications while the claim is being assessed, keeping customers in touch with progress and the reasons for any delay.
These were no doubt factors behind the rise in satisfaction with our service to 79% in 2017/18.
Though we directly protected only 70,000 customers in 2017/18, the great majority of consumers are our potential customers. There are few adults without either a deposit account or an insurance policy. Many will also make investments or seek investment, pensions or mortgage advice. Even though they don’t have claims now, those consumers need to understand our protection so that they make informed choices about financial products and so that they are reassured in the event of a failure in future.
So consumers will find in our annual report an account of how we have raised awareness of deposit protection to over 80% of adults and how we have reached agreements with UK Finance and the Building Societies Association about the use of the FSCS badge on websites and in advertising.
A priority for the future will be to raise awareness of FSCS protection of other products, with retirement saving a particular priority.
We are also accountable to the industry which funds FSCS and which benefits from the confidence that FSCS protection engenders in financial services. We are grateful for the support of our industry stakeholders, but are well aware that those stakeholders expect FSCS to be efficient and to maximise recoveries.
So our levy payers should welcome the information in the annual report about the gain we have made in value for money. By embracing digital technology, we have also saved £2.2 million in like-for-like claims processing costs.
And the annual report also records that during the course of 2017/18 we were able to pay down a substantial part - £11 billion in all - of the outstanding borrowing from HM Treasury which funded FSCS support for savers affected by the 2008 bank and building society failures.
We extinguished the remaining borrowing shortly after the end of the financial year covered by the annual report.
The report also records that in 2017/18 we recovered £6million from PPI lenders to offset the continuing costs of compensating those consumers mis-sold PPI policies.
The regulators and HM Treasury, quite properly, hold FSCS to account for our preparedness. FSCS must be ready to respond to major failures or even to another crisis.
Our annual report, therefore, sets out the steps we took in 2017/18 to develop and test our contingency plans for a wide range of eventualities. For example, we conducted an exercise to test our response to a bank failure.
We also followed up the lessons we learned from the failure of the Enterprise and Gable insurance companies in 2016. In particular, we continue to work with the regulators on improving the quality of information firms hold about their policy holders because this is key to FSCS’ ability to prove prompt protection.
Last, but certainly not least, we are accountable to our own people who have delivered the outcomes set out in the annual report. And the report, therefore, sets out what we have done to engage and to develop our people. It also records the remarkable number of awards and nominations achieved by FSCS’ people in 2017/18 – eleven in all.
So I regret the annual report is not more widely read, though I understand why. There is something in it for all our stakeholders.