FSCS credit crisis bill hits £21bn
by Gill Montia
Story link: FSCS credit crisis bill hits £21bn
The Financial Services Compensation Scheme (FSCS) has revealed that it paid out £21 billion to UK savers over a six month period, compared with just £1 billion in the seven years before the credit crisis.
The Icelandic banking collapse was largely responsible, with payments becoming due to savers with Landsbanki’s Icesave, Heritable Bank and Kaupthing Singer & Freidlander.
Bradford & Bingley and London Scottish Bank depositors also resorted to the scheme which saw enquiries rise threefold over the period of its annual report, to 234,000.
The FSCS is funded by a levy on UK financial services firms and reimburses up to £50,000 per individual per savings provider.
However, it should be noted that some providers have more than one brand name and savers therefore need to check whether brands are separately registered with the Financial Services Authority, to be fully covered.
In related news, the FSA has recently announced new “fast payout” rules for the scheme.
From 31st December 2010, individual and business customers of banks, building societies and credit unions that collapse should receive compensation within a target of seven days, and all payments within 20 days.
In addition, payouts will be made on a “gross” basis, meaning that a saver who has an outstanding loan or debt with their savings provider will not have the debt deducted from the compensation due.
Finally, consumer awareness of the FSCS will be boosted by new rules that come into force from 1st January 2010.