The FSA has today confirmed that the compensation and eligibility limits for the Financial Services Compensation Scheme (FSCS) and for the compulsory jurisdiction of the Financial Ombudsman Service (FOS) will remain at their existing levels.
The announcement follows a consultation by the FSA in which the majority of respondents supported the FSA's proposal for no change to the limits.
The current compensation limits for FSCS claims are: for compulsory insurance classes, 100% of claim; and for non-compulsory classes, 100% of the first £2,000 and 90% of the remainder.
The limit for FOS awards is £100,000.
The FSA said the recommendation were based on a review carried out during 2005 which found that:
· most claims or complaints are still well below the current maximum limits;
· there is no evidence that consumer behaviour and market confidence are being significantly affected by current limits;
· FSCS limits significantly exceed EU minimum limits (currently €20,000) for deposits and investments;
· FSCS limits are also generally higher than in other EU member states.
Individuals and small businesses are eligible to make claims to the FSCS and the Financial Ombudsman Service. The eligibility definition of a small business for FSCS claims depends on the type of activity. For the purpose of complaints to the ombudsman service, a small business is one with a group turnover of less than £1 million.
The current limits have been in force since the FSCS and the Financial Ombudsman Service started operating in December 2001 under the Financial Services and Markets Act 2000.
The FSA said it planned to review the compensation and eligibility limits again in 2009.
The recommendation was based on a review carried out during 2005 which found that:
· most claims or complaints are still well below the current maximum limits;
· there is no evidence that consumer behaviour and market confidence are being significantly affected by current limits;
· FSCS limits significantly exceed EU minimum limits (currently €20,000) for deposits and investments;
· FSCS limits are also generally higher than in other EU member states.
The current limits have been in force since the FSCS and the Financial Ombudsman Service started operating in December 2001 under the Financial Services and Markets Act 2000. The FSA plans to review the compensation and eligibility limits again in 2009.
