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New compensation scheme declares 48 IFAs in default

The Financial Services Compensation Scheme has declared 48 IFA firms in default so far this year.

The first figures from the scheme, which took over officially from the Investors Compensation Scheme this month, reveal a drop of 12 firms defaulting compared with the same period last year.

Around 360 firms slid into default in 2000, the second highest total since the ICS began in 1988.

Under FCSC rules, for the first time, clients of firms declared in default who believe they have been missold products can make complaints.

The complaint procedure includes a full investigation to determine the validity of the claim. The limit for compensation if the complaint is upheld is set at £48,000 per investor.

The FCSC is currently only responsible for the work done by the ICS but it will eventually take over from the five other existing financial services schemes including the building societies, friendly societies, policyholders and securities trading and investors&#39 compensation schemes.

Chief executive Suzanne McCarthy says: “The ICS&#39s default figures show there is a sizeable workload of compensation claims to be investigated. As we progressively pull together all the existing compensation schemes into a one-stop shop, we will be able to offer consumers a single point of contact and a more streamlined service.”

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