BIBA backs compensation scheme review announcement
Thu, 05 Nov 2009
The Financial Services Authority has confirmed that it will be conducting a review of the Financial Services Compensation Scheme (FSCS).
According to the British Insurance Brokers' Association (BIBA), the city watchdog will look into the ways in which levies are apportioned to different firms.
The announcement will be welcomed by building societies in particular, BIBA spokesperson Rachel Le Brocq said.
"We've always felt that the way the FSCS is structured means that building societies actually pay disproportionately for those institutions that have failed," she stated.
Ms Le Brocq said her association would like to see more of a system that reflects orgainsations' risk structures.
The FSCS scheme currently protects consumers' savings of up to £50,000 in the event of the collapse of their financial institution.
Building societies such as Nationwide have complained previously that the current system is unfair, as it is linked not to the level of risk institutions face, but to a company's share of the retail savings market.
The society's chief executive Graham Beale described this situation as being "illogical and unfair" as it produces a disproportionate outcome for low-risk retail funded institutions, particularly building societies.
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