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Cost of FSCS online claims project rockets to £20m

The cost of an online claims processing system being introduced by the Financial Services Compensation Scheme has spiralled by two thirds to £20.4m.

The project has also been delayed by several months and will now launch in April. 

The system, Connect, will allow consumers to make claims and check their progress online. The FSCS says it will deliver efficiencies and is “the single biggest business and systems transformation FSCS has ever undertaken”.

In its 2015/16 plan and budget, published this week, the FSCS says its current predicted spend on the project is £20.4m.

This is up from an initial estimate of £12.2m in 2013, which rose to £15.7m in 2014 “due to additional design requirements”.

An FSCS spokeswoman says: “Although Connect will cost more than originally estimated, the additional cost has been contained within the existing budget for 2014/15.”

The FSCS says it is being funded by savings in other projects and the reprioritisation of work, as well as lower spend on recoveries, including its legal battle with advisers over Keydata. It spent £4.4m on Keydata recoveries in 2014/15, down from an expected spend of £7.2m.  

Connect was originally due to go live in late 2014.

But FSCS chief executive Mark Neale says: “During the course of 2014, we identified a number of existing and potential design and testing issues with Connect that we needed to address. We knew this would result in delay, so we revised our plan and have moved our launch date to April 2015.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradley ceo Panacea Adviser 23rd January 2015 at 9:12 am

    “Although Connect will cost more than originally estimated, the additional cost has been contained within the existing budget for 2014/15.”

    A thorough grasp of financial planning well demonstrated by an FSCS spokeswoman.

    If the FSCS was a regulated firm, it would be out of business as it would be insolvent.

    Still, never mind eh, HMT will bail out as usual.

  2. MIssold Investor 23rd January 2015 at 3:43 pm

    @Derek Bradley: Agreed, and if FSCS were not being bankrolled by the tax payer (£16bn still owed by FSCS to the Treasury) it would have gone bust years ago (in 2008).

    It’s hard to imagine that FSCS would ever successfully automate claims processing, when so often it seems their cases are ‘complicated’ and require months of ‘careful consideration’.

  3. Ah well, it’s all just OPM, so who gives a damn? Don’t these people have any sense of fiscal responsibility? The IT firm contracted to do the job must be laughing all the way to the bank.

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