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FSCS orders inquiry into £20m online claims project

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The Financial Services Compensation Scheme has ordered an independent inquiry into the rising costs of its online claims processing system.

The system, Connect, will allow consumers to make claims and check their progress online.

In January, the FSCS said the total cost of the system had spiraled from an initial estimate of £12.2m to £20.4m.

It also said the launch of Connect had been delayed from late 2014 to April 2015.

In the FSCS’s 2014/15 annual report, published today, chief executive Mark Neale says the project will cost £3.6m in 2015/16 and will be subject to an independent review.

He says: “Connect is a major project that will bring benefits to consumers and the industry.

“It is not surprising, therefore, that its implementation has, at times, proved challenging.

“Connect cost more than we expected during 2014/15. We contained much of the additional cost within our budget for 2014/15. For the next phase of Connect, we have budgeted £3.6m for 2015/16.

“I understand the frustration expressed by some industry members about these higher costs. That is why I have commissioned an independent review into the project.”

An FSCS spokeswoman says the system “soft launched” in April, but online claims processing is not yet available to consumers.

The annual report also reveals the FSCS spent £661,000 on redundancies in 2014/15m as a result of “major restructuring”. In the previous year the lifeboat scheme spent nothing on redundancies.

Over the course of the year, the FSCS made 10 compulsory redundancies, plus a further 35 agreed departures.

FSCS director of central services Rommel Pereira left under redundancy terms on 31 July 2014.

He received £52,802 for 2014/15 in basic salary, plus £42,025 in lieu of notice and £5,172 in lieu of holiday.

The FSCS also contributed £7,800 towards Pereira’s legal fees in respect of the compensation arrangements, and £5,290 for “career transition coaching”.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Alasdair Sampson 16th July 2015 at 5:12 pm

    Oh for a job in the public sector.

  2. I would have thought an enquiry would have been in order if anything the government organises actually came in on budget

  3. It will be interesting to find out who won the tender for this project. Projects for Government bodies have a habit of starting off with an estimate of the cost and then spiral out of control? Do the project providers simply look and see a cash-cow? The cost of this project has risen by 67%!! The provider should be made to stick to their original estimate when tendering for the project and be subject to penalties for late delivery. I’m looking forward to seeing the results of the inquiry.

  4. Bernie Goldberg 17th July 2015 at 8:30 am

    As Duncan and Alasdair say, this is the public sector at its inefficient finest.

  5. What is “career transition coaching?” and why does it cost £5,290?

  6. Julian Stevens 17th July 2015 at 9:46 am

    How can a claims tracking system possibly cost £20.4m? Like the FCA, the FSCS seems to have no idea whatsoever of cost containment. What Cost:Benefits Analysis was undertaken before such a colossal outlay was sanctioned? Bugger all would be my guess because, hey, it’s just OPM so what the hell? Seems like a good idea, so let’s go for it regardless of what it’s going to cost. As recently reported, the FCA just wasted £3.2m on a project with which it ended up doing absolutely nothing. Has any planned project for the FCA or FSCS ever been canned because it simply wasn’t going to deliver benefits that would justify what it was going to cost? I rather doubt it.

    I expect that when any firm providing any sort of service receives an invitation to tender for a project for the public sector, they break out the champagne. Hey guys, another chance to bid for a contract with the FSCS/FCA. We can present them with pretty much whatever figure we fancy and chances are they’ll just say Yeah, okay, where do we sign? So what if we (the FCA) overspend our income by £58m? We can just add it to next year’s levy bill and we know the NAO won’t take any notice because their involvement is just a bit of window dressing. It’s disgusting, it really is.

  7. @JulianStevens agreed!

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