FSCS “Close to capacity”

The Financial Services Compensation scheme has admitted it is close to its limit in coping with new claims from individuals who believe that they were mis-sold.

In its latest industry newsletter the FSCS reported that it is almost stretched to capacity in coping with an increase in claims

For the 12 month period to April 2005 the FSCS paid out a total of £174.71m in compensation claims.

Loretta Mighella, Chief Executive of the FSCS stated that an increase in claims had led to delays for some individuals.

She stated “We are now almost at capacity within our current accommodation and recognise that there is a limit to how fast an organisation can and should grow to meet demands.”

Ms Minghella revealed that the FSCS was to outsource mortgage endowment claims to a third-party to ease the pressure of new claims.

Jul 26, 2005
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Lloyds TSB plc has allocated a further £110 million to compensate endowment policyholders. This is in addition to the £250 million which was set aside to pay compensation in 2003.

Lloyds TSB plc to impose a time bar on endowment policyholders that were mis-sold their policies in order to prevent them from making a claim

Reported in the Daily Telegraph December 2004

Mortgage endowment policyholders are collectively going to face a shortfall estimated at £ 40 billion

The average amount of compensation where a policy has been mis-sold is estimated to be £3,000
Source ABI (The Association of British Insurers) 2006