FSA calls on banks to invest £1bn on compensation systems

Daily news headlines

LONDON - The Financial Services Authority (FSA) has called on UK banks to spend an estimated £891.8 million on IT systems to speed up the process of consumer compensation in the event of a bank collapse. The FSA made the suggestion in a new consultation paper recommending enhancements to the existing Financial Services Compensation Scheme (FSCS).

The FSCS acts as the failsafe for deposit holders to the extent of £50,000 if their bank goes bust - as several have or have threatened to do in the past year. The IT recommendation would speed up the flow of information (customers' names and their deposits) from the bank to the FSCS within 48 hours, allowing compensation within seven days.

The FSA makes five suggestions. The first is for the simplification of eligibility requirements for deposit compensation to include all private individuals and small entities. The second is for gross payout, which would ignore any debts the depositor has with the same firm.

Third and fourth are for the firm to hold up-to-date information to allow quick claim processing, and that firms provide information on the existence and basic coverage of the FSCS for deposits.

The FSA also recommends requiring firms to tell consumers which trading names are covered by a particular authorisation. To read more, the consultation paper may be downloaded here.

http://www.fsa.gov.uk/pubs/cp/cp09_03.pdf

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: