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Financial Compensation - do you have a claim?

No-one likes to lose money - and especially not the sometimes considerable sums we entrust to financial services firms for our future. Things can go wrong though which is where the Financial Services Compensation Scheme (FSCS) can help. FSCS is a statutory fund of last resort – a financial safety net for consumers - and can pay compensation if a UK-authorised financial services firm is unable, or likely to be unable, to pay claims against it. It is a totally independent body and free to consumers to use, so if you have - or think you might have - a claim against a financial services firm join our online chat now with Suzette Browne and Esther Norris from FSCS.

Host: Hello and welcome - Esther and Suzette are with us and are ready to take your questions!
Esther: Hello!
Suzette: Hello!

Nez: Who is FSCS and what do you do?
Esther: The Financial Services Compensation Scheme (FSCS) pays compensation to consumers if they lose money because a financial firm is unable, or likely to be unable, to pay claims against it. This will generally be because it has stopped trading and has insufficient assets to meet claims, or is in insolvency.
Suzette: FSCS is the UK's statutory fund of last resort for customers of authorised financial services firms. FSCS is an independent body, set up by an Act of Parliament - the Financial Services and Markets Act 2000 (FSMA).
FSCS protects: deposits, insurance policies, insurance broking (for business on or after 14 January 2005), investment business, and mortgage advice and arranging (for business on or after 31 October 2004).

Webbo: What is the difference between you and the FSA? Why don't they do what you do too?
Suzette: FSCS only covers business conducted by firms authorised by the FSA, the independent watchdog set up by government to regulate financial services and protect customers. By law, most financial services firms in the UK must be authorised by the FSA.
Esther: Let's quickly explain the relevant acronymns. FSCS - we are the Financial Services Compensation Scheme, the Financial Ombudsman Service (FOS) deals with complaints against firms that are still in business, and Financial Services Authority (FSA) is the regulator. The FSCS is only able to handle claims against firms that were regulated by the FSA at the time of advice.

Steve G: Do I have to pay anything to have my claim considered by FSCS?
Esther: Our service is free to consumers. We are a non-profit organisation

Moneyman: How can I find out if a firm is a 'member' of FSCS?
Suzette: All regulated firms are covered by the FSCS. To check whether a firm is regulated (by which we mean authorised to trade in the financial services industry) you should check the register on the FSA website. Visit them at www.fsa.gov.uk

Mary Nuffield: How much can I claim for?
Esther: For investment claims FSCS can pay out a maximum of £48,000. This is made up of 100% of the first £30,000 claimed for and 90% of the next £20,000.
Suzette: For desposits, we pay up to £31,700. This is made up of 100% of the first £2000 and 90% of the next £33,000.
Esther: For insurance claims, the first £2000 is covered in full plus 90% of the balance. Compulsory insurance is covered in full.

Alison: Does compensation cover any guarantees I was given?
Esther: We only compensate for actual loss incurred, as a result of negligent advice by the firm that has caused the loss. We don't pay compensation where a claim relates to the failure of an investment to match investment guarantees, or adverse market performance.

Raymond Jones: Where does FSCS get its money from?
Suzette: The FSCS is funded by a compulsory levy by financial services companies that are regulated by the FSA. FSCS was setup by an Act of Parliament. It's independent and free to consumers.

Help please?!: I bought insurance last year through a company called Whitely Insurance Consultants - and they have gone belly-up. Can I claim for my money back that was paid to them through you or would it be quicker to go through my credit card company?
Suzette: FSCS may be able to help with claims against this firm.
The limit to compensation we can pay for insurance claims is: the first £2,000 of a loss will be met in full. FSCS can then pay 90% of the remainder of the loss. However, we can only help if business was conducted with this firm after 14th January 2005, which is the date that insurance brokers first became regulated. Please contact our Customer Services Team on 0207 892 7300 for more information or visit our website: www.fscs.org.uk/latest_news?Whiteley_Insurance_Consultants/

Suzanne: What do you know about CA Independent Financial Services? Am I too late to claim against them through you?
Esther: We have declared C A Independent Financial Services Limited (of 8/4 Maritime House, The Shore, Edinburgh EH6 6QN) in default on 9th February 2006. The FSA reference number of this firm is 134783. If you believe you have a claim against this firm you should contact our Customer Services Team on 020 7892 7300.

Becky: How long does it take to make a claim?
Suzette: After a firm has been declared in default, FSCS generally aims to process your claim within six months of receiving your application form.
Esther: We are often relliant on getting hold of important files from third parties - or we may be waiting for information from a liquidator, or we may have many claims arising from a particular default. Naturally, this all takes time to process and may cause delays.

John stevens: I have my money in a joint account in a High Street bank. Would FSCS pay compensation to both account holders if the bank failed?
Suzette: The compensation limit of £31,700 applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are single or joint account holder. In the case of a joint account FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise. This means that each account holder in a joint account would be eligible for compensation up to the maximum limit

Trevor Hobden: How do you decide if a firm is likely to be unable to pay claims against it. How do you know what claims are likely especailly if the amounts that could be owed back could be variable. Are you not somewhat likley to be acting after the horse has bolted, so to speak?
Esther: We are triggered when we receive at least one claim for compensation against a firm. We then investigate the solvency position of a firm to determine whether or not it has enough assets to be able to pay the claim(s). Once we are satisfied that a firm is unable or likely to be unable to pay claims against it, we declare the firm in default. In most cases we don’t know what claims are likely.
Suzette: However, once we have declared a firm in default we publicise this so that anyone who had dealing with the firm and may have lost money as a result can contact us to make a claim.

Sol: Can I claim for all of my investment - or is there a limit imposed?
Esther: Compensation only covers financial loss, and our rules limit the compensation we can pay for an investment claim to £48,000 (100% of the first £30,000 and 90% of the next £20,000) per person, per firm.

Riz: Is it unusual for you to pay out - or is this an everyday thing? What I mean is, is it worth the hassle or will a claim end up adding insult to injury?
Esther: Not all people who contact us are entitled to receive compensation according to our rules. We currently uphold around 50% of all the claims we receive.
Suzette: If you think you have lost money in your dealings with a firm that has gone out of business, then contact our customer services team. They will be able to tell you if they think you have a claim that we can help with.

Max: Can you provide compensation for UK citizens that have invested in companies aborad, though marketed in the UK?
Suzette: We can only compensate individuals who have lost money as a result of their dealings with investment firms that were authorised in the UK, at the time of advice.

James: Having visited your website I believe I am entitled to compensation -is there any reason why I would not get all I am entitled to because of my personal financial situation (I was declared bankrupt earlier this year).
Suzette: Claims for compensation are not means tested – each claim is assessed on its own merits. To be eligible for compensation you must have lost money because of your dealings with an authorised financial services firm.
Esther: For example, for investment claims the compensation we pay would try to take account of the financial position you would have been in had you not invested.

Shelley: Are you able to offer any compensation in advance of a company ceasing trading even when it is obvious they are in trouble?
Esther: The short answer is 'no'!
Suzette: We can only help consumers if a firm is unable to, or likely to be unable to, meet a claim that is being made against it.
Esther: If the firm concerned is still trading and someone has a claim that they wish to make against them, they need to approach that firm in the first instance. It is only if the claimant is unhappy with the outcome that they should the Financial Ombudsman service. And then, if they do cease trading then we could then consider your claim.

Laura: How do I know if a firm is regulated by the FSA
Esther: You can check this by simply visiting the FSA Firm Register on their website which is www.fsa.gov.uk
Suzette: On their home page - just click on the link for the FSA Register...

Jon K: What procedure do I follow when I want make a claim and under what circumstances can you not HELP me?
Esther: Contact our customer service team in the first instance on 020 7892 7300. They can discuss with you the circumstances of your complaint and tell you what you need to do next.
Suzette: Or, you can go to our website at www.fscs.org.uk and there is lots of information there to help you determine whether or not your claim falls within our remit and we can help you.

Tony: How far back can i claim? are the 1980's too long ago?
Suzette: If its for investment claims and you dealt with the firm after the 28 August 1988 we may be able to help.
Esther: This is because our predecessor, the Investors Compensation Scheme, was set up on this date.
Suzette: For claims against general insurance intermediaries we only cover business conducted on or after 14 January 2005. For claims against mortgages firms, we only cover business conducted on or after 31 October 2004

Stacey: Do you cover online companies as well?
Esther: For business conducted on the Internet, provided the firm is authorised by the FSA, and a claim is eligible under our rules, then we can deal with claims as with any other authorised firm.

Jay Sharpe: Can i still claim if a firm is not a member of the FSCS?
Suzette: We can only help you with claims against firms that are authorised by the FSA. If they are authorised then customers of the firm are protected by FSCS.

Ric: Do I have to go back to the orginal company or do I approach the one which has taken over or issued the policy? Many thanks
Esther: It depends what the claim is about. If the complaint is about the policy itself and the policy provider is still trading then you should direct your complaint to the policy provider. If a company has been taken over then you should take your claim to the parent company.

Tyler: What does default actually mean? How do you work it out?
Suzette: 'Default' is a term that we use to describe the fact that we have investigated a firm's solvency and determined that it has insuficient assets to meet claims.
Esther: When we receive a claim or claims we will estimate what the value of the overall claim is likely to be, and we also consider the firm's assets and whether or not they are able, or likely to be able, to meet these claims. If they have sufficient aseets to meet the estimated value of claims, then we cannot declare them in default.

Eddie: Do i need to use a solicitor to make my claim??
Suzette: No! We are a statutory body, our service is free to consumers.

Concerned: How are you today ?
Esther: We're fine!
Suzette: Thank you!

Mr Smith: It seems a bit too good to be true! why did the FSCS get set up? or am i being cynical?!
Esther: FSCS exists to protect consumers in the event that they suffer financial loss. FSCS was set up by the Financial Services and Markets Act 2000 to bring all the financial compensation schemes under one roof.
Suzette: Before that there were 8 different compensation schemes which could be confusing.

joe black: When will the FSCS advertise their services to the public so that they are more aware that the FSCS exists?
Suzette: Although we don't currently advertise, there are a number of ways in which we do raise awareness of the scheme. For example we work with consumer advice workers such as Citizens Advice Bureau and the Money Advice Association - and, of course, through events like this!

Mark: Do I have to pay anything to have my claim considered by FSCS?
Suzette: No - it is a completely free service for consumers.

May: Would you agree it is probably better to only invest through companies who have a proven track record?
Esther: You should always deal with authorised firms.
Suzette: As advised earlier, you can check that a firm is authorised on the FSA website.

Gary: Nice idea - but does the taxpayer end up paying for all this compensation in the long-run anyway?
Esther: No, the service is free to consumers. We are funded by a levy on the financial services industry. We are not funded by taxes from the government.

Concerned: That is pleasing. If I a entitled to compensation on an endowment claim, would those monies be added to my existing endowment policy, or would compensation be made directly to me. Thank you
Esther: If you were eligible for compensation, you would normally receive payment in the form of a cheque.

Ash: What's the difference between the FSCS and the FOS?
Suzette: FSCS only covers business conducted by firms authorised by the FSA, the independent watchdog, set up by Government to regulate financial services firms. The Financial Ombudsman Service (FOS) deals with complaints against firms that are still in business, and FSCS is only able to handle claims against firms that have ceased trading that were regulated at the time of the advice..

Host: That's all we have time for today - thank you very much for all your questions and to Esther and Suzette. Any final thoughts or comments to add?
Suzette: Thanks to everyone who has participated. Hopefully we have answered all your questions
Esther: Yes, thanks everyone. If you do have more queries please do check our website at www.fscs.org.uk or call our customer services team - the number again is 020 7892 7300.

Bobby: Where does FSCS get its money from?
Esther: The FSCS is funded on a levy by financial services companies that are regulated by the FSA.
Esther: FSCS was setup by an Act of Parliament. It's independent and free to consumers. We are funded by levies that are compulsory for financial services companies

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