The Openwork Partnership’s Chief Commercial Officer Mike Morrow shares his thoughts on the Financial Conduct Authority’s (FCA) announcement that the Financial Services Compensation Scheme (FSCS) will be reviewed.
Mike Morrow, Chief Commercial Officer at The Openwork Partnership, comments:
“The FCA’s plan to cut the Financial Services Compensation Scheme levy is on the face of it very welcome but as ever we need to see what it will mean in practice.
“The FCA is promising a review of the FSCS compensation policy framework but we should be looking at wholesale reform of the FSCS funding model and we strongly support the ‘polluter pays’ principle. Regulated firms which cause customers to lose money should bear the burden of compensation.
“The FSCS plays a vital role in UK retail financial services but as PIMFA has argued policy should focus on preventing harm to customers rather than waiting for them to suffer and then relying on the FSCS to address the issue.
“Continuing with the current funding approach means that the FSCS penalises prudent firms whilst in effect providing a no risk default environment.”