FSA consults on changes to FSCS framework

8th January 2009

The Financial Services Compensation Scheme (FSCS) welcomes the publication by the FSA of a consultation paper setting out proposals for speeding up the payout of compensation to make it possible for customers to get back their money more quickly if a bank fails.

The critical importance of the FSCS in paying out compensation to depositors has been emphasised by the events of recent months. As part of the wider banking reform work the Tripartite authorities and FSCS have committed to ensuring faster payout from the FSCS.

Loretta Minghella, Chief Executive at the FSCS said: "Recent events have confirmed the importance of the role FSCS plays in protecting depositors and helping to maintain consumer confidence. We welcome the FSA's proposals to strengthen the compensation framework for FSCS. We have worked closely with the FSA on the proposals which, if implemented in full, will enable the FSCS to pay compensation more quickly if a bank fails."

The FSA's consultation paper makes the following recommendations:

The consultation paper also includes proposals on plans to increase the awareness and understanding of the FSCS among consumers.

The consultation will be open for responses until 6 April 2009.