A row has broken out between Berkeley Berry Birch group chairman Cliff Lockyer and the Financial Services Compensation Scheme over the calculation of potential redress against the collapsed Berry Birch & Noble Financial Services.
Lockyer has accused the FSCS of “crass stupidity” when calculating potential redress because he disagrees with its assessment of potential claims.
The FSCS says it expects to pay out around £2m in claims for BBNFS, calculating that of the 260 claims it has so far received, around two-thirds relate to precipice bonds, which on average pay out £12,500 in compensation.
But Lockyer says it is possible that the FSCS will not have to pay out for BBNFS at all because when the business was closed, it was left with £1m in cash and PI insurance for a further three months until the end of August. He says the FSCS’ calculation of redress is faulty and BBNFS sold only 660 precipice bond policies out of a total of 20,000 policies sold overall and only two complaints have so far been upheld.
Lockyer says: “It is crass stupidity. It would be impossible for all the claims it has rec-eived to be upheld and it may be that the FSCS does not have to fund any potential claims.
FSCS spokeswoman Hea-ther Tilston says: “We used our experience of dealing with claims to arrive at our estimate of £2m which we stand by.”