Our mission and strategy

FSCS into the 2020s: Protecting the future

 

Our mission is to provide a trusted compensation service for customers when financial firms fail. This helps to raise public confidence in the financial services industry.

FSCS Image

Who we are and how we help

We aim to build and maintain the trust of everyone we work with through rigorously independent decisions, efficient operations, resilience in tackling financial failures and always putting our customers first.

We don't just protect consumers with claims against failed firms, we promote awareness and understanding of FSCS protection, learn lessons and work with our stakeholders to help prevent future costs and failures.

The key challenges

Customer expectations

  • Customer expectations are rising - companies are harnessing digital technology to offer customers quicker, easier, more personal services.
  • Financial markets are changing fast - new ways to save and invest. Financial protection and education will need to keep pace with complexity and innovation.

Choice, complexity & vulnerability

  • People are expected to make more sophisticated financial decisions, particularly about retirement savings - with this comes greater risk and the need for better information.
  • Approximately half of UK adults show characteristics of potential vulnerability - low financial knowledge, low financial resilience, poor health or life events impacting financial well-being.

Technology & data security

  • Pace of technology change creates opportunities to improve ease and speed of service, at a lower cost to levy payers.
  • Commitment to keeping personal data secure in a technology-driven world remains critical.
  • Continual challenge to simplify our online service, especially for complex claims.

Prevention as well as protection

  • Our industry stakeholders recognise the role that FSCS protection can play in giving consumers the confidence to seek independent financial advice and buy financial products.
  • FSCS must also be proactive in sharing its insights and intelligence with the regulators in order to reduce the risk of future failure.
  • Since its establishment in 2001, FSCS has paid out hundreds of millions in compensation as a result of firm failures, often precipitated by the mis-selling of products unsuitable for mainstream investors.

Our strategy

Prepare

FSCS must be able to protect consumers in a crisis or in the event of major failures to maintain public confidence and financial stability.

Arrow

Protect

FSCS is known and trusted for protection that puts people back on track through outstanding customer experience.

Arrow

Prevent

FSCS collaborates with our regulatory and industry stakeholders to prevent future failure and to reduce compensation costs.

Arrow

Promote

The full range of FSCS protection is known about and trusted.

Arrow

What we are aiming for

We shall respond to large and complex firm failures, whilst maintaining our seven-day pay-out for savers in banks, building societies and credit unions. We will actively contribute to increasingly effective resolution when firms fail.

Why this matters

FSCS needs to contribute to public confidence and financial stability by being ready to respond when called upon across the full range of protected products.

Our approach

  • Maintain well-tested contingency plans, backed by necessary capabilities and robust customer information.
  • Collaborate with industry to improve the customer information we rely on for payouts.
  • Improve our ability to respond quickly to investment and insurance failures.
  • Work with industry and regulators to improve resolution arrangements.

What we are aiming for

FSCS is known and trusted for protection that puts people back on track through outstanding customer experience.

Why this matters

Customer expectations are rising. The service our customers receive must meet their expectations in terms of speed, accessibility and ease of use, in order to maintain consumer trust and confidence.

Our approach

  • Exploit digital technology to create the service our customers expect, at lower cost to our levy payers.
  • Improve the speed of our service by eliminating time and process inefficiencies, particularly with third parties.
  • Exploit our new strategic partnership - by drawing on our partner's expertise, scale and experience.
  • Provide continuity of cover for policyholders in failed insurance companies.

What we are aiming for

We shall raise awareness of FSCS protection across all of the products and services we protect, particularly retirement savings products.

Why this matters

Awareness of, and trust in, FSCS protection maintains confidence in a crisis. Awareness also helps to inform people's choices by increasing their confidence in buying protected services and understanding the risks of unprotected products.

Our approach

  • Partner with the industry to raise awareness of FSCS protection across all protected products and services, focusing on retirement savings initially.
  • Engage with consumers and provide information to help people understand protection and make informed decisions.
  • Encourage customers of failed firms to come directly to FSCS with their claim.
  • Work with our stakeholders to provide joined-up and easy to access information about FSCS protection.

What we are aiming for

We shall collaborate with the regulators and industry to prevent future failure and to reduce future compensation costs.

Why this matters

FSCS compensation costs are rising fast. These costs put pressure on firms' finances and are passed on to consumers.

Our approach

  • Commit to joint action with the regulators and industry to identify and address the root causes of mis-selling and other conduct issues which drive failure and compensation costs.
  • Ensure consumers are alerted more quickly to vulnerabilities and risks as they emerge.
  • Work with our partners to improve co-ordination across government, industry and regulators, ensuring insights and intelligence are generated and acted on.
  • Feed back lessons learnt as a creditor and from recoveries activity, including working with the insolvency and insurance markets.
  • Develop FSCS' own capability to provide actionable intelligence.