The accountabilities of FSCS are obvious, aren’t they? FSCS exists to provide a service to consumers who lose money when financial services businesses go bust.
We do indeed.
FSCS’ first priority will always be to provide that service professionally and responsively. We are many consumers’ last resort. We must be a last resort that works sympathetically and accurately, awarding compensation where it is due and explaining clearly when consumers are not eligible why that is.
But probe a bit deeper and FSCS’ accountabilities actually go much further.
The service we provide compensates the small minority of people who lose money in financial failures every year, but, in doing so, our service reassures the great majority of other consumers and underpins confidence in financial services.
So we are also serving the industry. And it is, of course, the industry which funds us.
FSCS’s ability to respond to financial failure by protecting those affected is an integral part of national arrangements for resolving failing businesses without undermining financial stability. So FSCS serves an important national interest for which it accounts to government, the regulators and Parliament.
You will find these multiple accountabilities woven through the FSCS Plan and Budget for 2013-14 which we published today.
Now I don’t want to save you the trouble of reading our business Plan and Budget. It re-pays a quick look, I promise. But I do want to underline some of the ways in which FSCS is fulfilling its accountability to the industry.
We do so partly, of course, by providing as much visibility as we can of the costs we impose, including our forecasts of compensations costs in the year ahead. We update this information throughout the year through our Outlook publication and in regular meetings with the trade bodies.
We also, however, take active steps to reduce those costs – and not always, perhaps, in ways you might expect.
For example, as our Chair, Lawrence Churchill, brings out in his introduction, we are always prepared to consider options to resolve failing businesses which avoid a pay-out and, in the process, achieve better outcomes for consumers and better value for our levy payers.
The transfer of the Bradford & Bingley deposits to Santander in 2008 falls into that category. So does the innovative deal we concluded in 2011 to protect consumers with PPI claims against Welcome Financial Services.
The investments we make in our business all have the twin aims of improving both our service to consumers and our efficiency.
We aim in 2013-14 to develop an e-channel for consumers to submit claims. This will be more convenient for those consumers who prefer to operate on-line, but also reduce FSCS’ costs of processing those claims.
And, of course, as I’m sure you would expect, we hold down the costs of running FSCS. Exceptional items aside, our budget for our operational and investments expenses falls compared to this year by around £1.5 million.
So, yes, FSCS’s first accountability is to consumers. However, we recognise our important accountability to the industry. Our Plan and Budget for next year sets out how we intend to discharge that accountability in 2013-14.
The Financial Conduct Authority website includes a searchable database of all firms authorised and regulated by the FCA and the Prudential Regulation Authority (PRA).