The Financial Services Authority (FSA) has published a consultation paper discussing revisions to the maximum limits of compensation payable by the Financial Services Compensation Scheme (FSCS). The FSCS covers deposits, life and general insurance, investment business, and home finance mediation.
The FSA had intended to review these limits in 2009, however this was brought forward due to current market conditions. There are two changes that the FSA has made without consultation as it considered it would be prejudicial to the interests of the consumers to delay their implementation. These are:
- an increase in the FSCS deposit compensation limit from £35,000 to £50,000; and
- changes to the way that recoveries from the assets of a failed deposit taker would be allocated to people with deposits above the new protected limit of £50,000.
These changes will take effect from 7 October 2008.
The FSA has also proposed alterations to the FSCS life insurance, general insurance and general insurance intermediation limits and has requested comments on these proposals be received by 5 January 2009. The FSA will then finalise the proposed rule changes and publish them in a Policy Statement later in 2009.