uncertain investment value

Compensation for illiquid funds – how we’ve made it easier to claim

We’ve recently improved how we go about paying compensation for our investment customers with illiquid funds. The claims process is now much simpler and has resulted in a quicker, more streamlined experience with final payments made 100 days faster than before.

What are ‘illiquid funds’?

Illiquid funds are investments that can’t be easily sold or exchanged for cash without a considerable loss in value. Liquid investments, on the other hand, can be quickly converted at a reasonable price.

Because of their uncertain nature, we can’t always tell how much an illiquid fund is worth. They often turn out to be worth nothing but until we know for sure, we can’t pay the customer their full and final compensation payment. Instead we pay them ‘interim compensation’ until we know the final investment value. When that time comes, we make a ‘top up’ payment if there’s a gap between the interim compensation we’ve paid and what the customer’s investment is worth.

Our improved compensation payment process

We’re always looking for ways to improve our service so that we can get money back to our customers as quickly as possible. Previously we used a reactive method when paying compensation for illiquid funds, waiting for a customer to get in touch with us when they knew the final value of their investment. We realised we could flip the process to be much more proactive and create some brilliant benefits along the way.

We now have a dedicated Illiquid Funds team at FSCS who actively check the value of these investments on a regular basis, or when we find out there has been a change. The team reopen any claims that need to be reviewed as a result and then pay the relevant compensation automatically, normally without our customers needing to take any further action. It’s an important change that has taken the onus off the customer and made it our responsibility to check the value of the funds.

Better service for our investment customers

By putting a more efficient process in place, we’ve been able to improve the experience for our customers in two key ways:

  • Faster payments – Customers with illiquid fund investments now receive final compensation payments 100 days sooner than before.
  • Less work for our customers – We’ve removed the need to get back in touch when the value of an illiquid fund becomes clear. It’s one less thing to remember to do, making life that little bit easier.

Visit our investments page for more information about FSCS protection and how you can make a claim.