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The Financial Services Compensation Scheme paid out more than GBP 21 billion in compensation to savers during six months from the end of September 2008. This compared to around GBP 1 billion paid from its inception in 2001 until late September 2008, the FSCS said in its Annual Report and Accounts 2008/09 published on Friday.
The Financial Services Compensation Scheme is the U.K.'s statutory fund of last resort for customers of authorized financial services firms and it can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. The FSCS is an independent body, set up under the Financial Services and Markets Act 2000.
The annual report showed that FSCS was mainly required to respond to demands created by the failure of five banks namely Bradford & Bingley, Landsbanki Islands' U.K. savings arm Icesave, Heritable Bank, Kaupthing Singer & Friedlander Limited and London Scottish Bank.
The volume of enquiries to the FSCS recorded a sharp increase to reach 234,000 from 73,000 during the period. The FSCS also implemented new ways of paying the unprecedented number of claims like creating an electronic process to pay nearly 200,000 Icesave customers in a simple process.
According to the report, 2008/09 was a year in which claims' volumes in some areas of the FSCS's work continued to decline. The FSCS anticipated some 14,000 new claims for the year, but only 11,082 were received and 10,887 were completed. Further, the FSCS ended the year achieving its core target of completing 90% of new claims within six months of receiving an application for compensation.
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