FSCS: Recoveries totalling £300m have cut industry levy

By Hope William-Smith

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Mar 28, 2019

Mark-Neale-at-office-in-2014-700.jpgThe Financial Services Compensation Scheme has recovered just under £300m from failed financial services firms since 2014.

Outgoing chief executive Mark Neale labelled the recoveries “unsung work” on behalf of the lifeboat fund which is a major contributor to public confidence in the industry.

The FSCS says the recovered funds have significantly reduced what advisers could have paid, despite the new £69m levy announced for this year last November.

Around £20m has been recovered from court proceedings against a number of lenders for excessive commissions as part of payment protection insurance over the past five years.

More than £50m has also been recovered as a result of Keydata litigation in relation to multiple IFA firms’ misselling of Lifemark investments.

Neale says recoveries will be central to the FSCS’s new strategy for the 2020s as it looks to keep levies down.

FSCS general counsel James Derbyshire says this will include more complex procedures.

“The usual avenues of recovery we pursue include actions against the firms we’ve declared in default, and their PI insurers. Increasingly, however, we are taking ever more complex recoveries action, and in those instances we tend to make use of our panel of law firms, who have both the expertise and jurisdictional reach to assist us.”

A new five-year business plan for the lifeboat fund is expected to be finalised before Neale’s departure in May.

Neale says: “I am very proud of the professionalism of our recoveries team in navigating complex cases to successful outcomes.”

A £20bn Government loan the FSCS to cover claims relating to the banking failures during the Global Financial Crisis in 2008 has now also been repaid.

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