FSCS receives 700 fewer investment claims

The Financial Services Compensation Scheme (FSCS) received almost 700 fewer investment claims in 2010/11 than the previous year.

Its annual report published today revealed the scheme received 23,603 claims for the investment intermediation sub-class in the last financial year, compared to 24,301 in 2009/10.

One factor accounting for the decrease was a significant reduction in claims in respect of Pacific Continental Securities and Square Mile Securities from the previous year.

However, the FSCS said Keydata accounted for the largest proportion of new claims in the year, with 18,355 new claims.

It added 32,196 claims were completed in the sub-class during the year (compared with 15,188 during 2009/10), with 90% of claims resulting in an offer of compensation and an average payment of £9,910. In 2009/10, the average payment was £10,799.

The increase in completions during 2010/11 was due to the FSCS being able to resolve a significant number of claims received towards the end of 2009/10 in respect of Keydata, it added.

Overall, the failure of Keydata and stockbroking firms resulted in 60% of new claims being placed in the investment sector, the report said.

Meanwhile, claims relating to Payment Protection Insurance (PPI) accounted for 20% of new claims.

The FSCS also said it may have to raise an additional levy for the next financial year after a number of firms in the investment intermediation and investment fund management sub-classes applied for a reduction in their levy due to errors in tariff data submitted to the FSA. The claims total £79,993,000.

"Based on the best information available to the directors, provision for £30,000,000 has been made in the accounts," it said. "The claims are currently being investigated and any amount eventually repaid is likely to be levied in 2011/12. The final outcome may potentially result in a material adjustment to the provision being required."

Earlier this year, the FSCs confirmed its proposed levy for 2011/12 is £217m.

The report claimed the FSCS has "transformed its capability as an organisation" with strengthened systems and processes enabling the scheme to deal with a greater complexity of claims across all sectors.

Overall, 95% of all claims were completed within the target time-frame.