FSCS profiteering

I have just learned, from a firm of incolvency practitioners dealing with the FSCS, that when an investor suffers a loss of more than the £50,000 FSCS compensation cap, the FSCS still claims and receives the full amount deemed to have been lost but only passes the lower £50,000 to the client. The FSCS keep the difference. They do not pay the difference to the investor, nor do they pay it to the Receivers for the IFA firm, so that creditors can benefit. In the particular case there were a number of claims over £100,000 where the FSCS seems to have pocketed the difference! Can this be justified?

Posted by: Anonymous

FSCS Sticky Fingers

Yes, Anonymous,it appears there could be a justification. It would normally go in the tick-box marked 'FRAUD & THEFT'. How in the world can even a numbskull lawyer write terms of reference like that. Maybe they have not got them and it is simple theft. Perhaps a 'Freedom of Information' request to look at their authority would either bring egg all over their face at the revelation of this casual ttitude to other people's money or open up the courts to suing or imprisoning a few of them.

Posted by: Orlando Furioso

Nothing like a lawyer to scare the pants off you

Sensationalist reporting. I guess it receives attention, but why cry fire? 1. Thousands of IFAs? Are you sure? Even a few hundred would be pretty awful. 2. The case of bad advice by the FOS (NOT the FSCS) has first to be judged. That in these circumstances is not a given. It's all about the right advice and risk profiling at outset. If your 'ducks are in a row' then you ought to have nothing to fear. That doesn't do much for the customer. Advisers can however try to help customers claim through (in this event) the FSCS.

Posted by: Harry Katz

Not completely correct

There is a fundamental issue here so if IFAs have probelms with their insurers they should contact me. The FSA should investigate the practice of using so many wide exclusions because these policies are worthless, they just make fat profits for the brokers and underwriters without affording any worthwhile protection IFAs their clients (consumers) or other IFAs when the bill lands on the doormat at the FSCS.

Posted by: Evan Owen

Can author check their facts please ?

The article states: The FOS has a claims limit of £100,000. Clients with more than that invested in Keydata may decide to fight for the rest in court, and IFAs would have to pay the legal costs win or lose. .............. Sorry, who says the IFA must pay the courts fees win or lose - that's the beauty of the court and the trouble with the FOS; the courts don't "automatically" dump on the defendant - the FOS always does because the "FOS case fee" is nothing more than a "fine on the innocent" where the complaint is not upheld. Try retiring and see what happens with FOS !!

Posted by: RU+

O WHAT FUN

Our industry is great !!! Well i am glad i have maitained a very simple rule, 'only deal with the horses mouth not the horses ....' All of these so called wholesale houses, platforms, wraps etc.... well can they be trusted do they allow us to offer our clients good value, protection, in truth the answer has always been NO. They are an additional cost, to the client, we have no access to or control as to their compliance, doe's it work, is it checked and monitored on a regular basis, well i think that Keydata gives us all the answer to this. If you say you are Independent FA's well then TCF for your clients is paramount, wholesale platforms, wraps etc DO NOT AND NEVER WILL be trusted by me. If you use these and there is a problem like keydata again, then your PI insurance will force most it not all into liquidation as the excess has always been per claim, with this in mind, your business plan should take this risk factor into account, look out here comes the FSA after the horse has bolted again.

Posted by: Barry Davis