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Consumers unaware of financial redress

Consumers rate security of their money as the most important factor when making investment decisions, according to research by the Financial Services Compensation Scheme.

A Mori poll in October asked almost 2,000 people around the UK what they consider when taking out investments, insurance or placing deposits. It found that past performance is the second most important factor, which seems to contradict the FSA&#39s decision not to include this on its comparative tables.

Over 80 per cent of respondents believe a firm must be registered with a regulatory body before offering advice or accepting deposits but 41 per cent do not know how to find out whether a firm is registered and who it is regulated by.

Forty-five per cent of people say they do not know if anyone would compensate them if a financial provider collapsed.

The FSCS commissioned the research to discover attitudes to financial products, advice and knowledge of the existence of the compensation scheme. It did this in the run-up to becoming the new one-stop shop for compensation on December 1. It replaces the Investors Compensation Scheme, Deposit Protection Board and Policyholders&#39 Protection Scheme.

FSCS head of communications Heather Tilston says: “The results of the research show we must work to raise awareness of the scheme as most people expect compensation but do not know where to get it.”

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