Has the FSCS lost its marbles?
The Financial Services Compensation Scheme seems to have adopted a marbles-based approach to Keydata claims.
In my school days, a popular break time game was marbles. Having spent the weekend building up a collection of galaxies spots and stripes, I would enter the playground and compete to win more by hitting an opponent’s marble with mine.
There are two ways of playing this game. Either use your big marbles for a win against smaller ones, but risk losing your larger marbles, or compete for the big marbles with any size, but risk losing more.
At the end of break, you end up with a collection of lots of small marbles or a few big marbles. Ultimately, it is those with the big marbles that gain respect.
The removal of more than 100 names from the FSCS Keydata claims suggests that the FSCS would be the child going after all the small marbles. It has launched more than 600 claims related to Keydata sales and gradually that litigation is being reduced either through settlements or because the claim was incorrect.
Most of the settlements have been made with the company stating that they have no liability but just wanted to get rid of the claim.
The FSCS risks turning into the schoolboy who no-one wants to play marbles with any more as his marbles have no value. The small marbles can be colourful, but the big ones are more shiny and attractive, and arguably more valuable. Ultimately he loses respect and will have no-one to play with.
The FSCS needs respect if it wants other firms to comply in future claims and wants to be able to continue recouping funds.
The FSCS would gain more respect, and bigger marbles, by considering its claims rather than issuing blanket shots.