FSA is consulting on planned changes to how quickly depositors can get payouts from FSCS. FSA plans to:
- make it possible for customers to get their money back within seven days if a bank fails: the plans also include allowing FSCS to settle claims where the value of the claim is likely to be negligible or lower than the cost of the investigation;
- make all private individuals and small entities eligible for compensation: this would widen the current scope;
- calculate compensation on a gross basis per regulated entity, which will take less time than the current net calculation method; and
- require institutions to:
- tell customers about FSCS coverage of deposits;
- tell customers what trading names an authorisation covers (FSA has considered extending the current temporary rule that allows customers of merged building societies protection for each trading name, but has decided that going forward protection by trading name is not practical); and
- keep up to date information which will help quick processing of claims.
FSA wants comments by 6 April and wants to introduce the changes during 2010. It wants to bring in the customer disclosure rules at the beginning of 2010 and the fast payout rules at the end of 2010. The UK will have to implement the revised Deposit Guarantee Directive at the end of 2010 and FSA thinks its proposals are in keeping with the Directive. Although FSA plans to implement its proposals through changes to its rules, the Banking Bill and wider banking reform package may lead to some more changes to the way FSCS operates. Also, FSA will look separately, later, at funding arrangements for FSCS and how to treat temporary high balances or client accounts. The paper also covers systems requirements and FSA's plans to raise consumer awareness of FSCS.