Happy belated birthday to the Financial Services Compensation Scheme, the compensation fund of last resort for customers of authorised financial services firms.
At the start of this month, the FSCS was 13 years young. And there is no doubt it has done a cracking job, although, of course, I know many financial advisers grumble about the annual levy they are required to pay to keep the FSCS lifeboat afloat.
For the record, since December 2001, the FSCS has helped more than 4.5m people, paying out £26bn in compensation. That is one big achievement.
Its finest moment was the payment of £4.5bn of compensation to the quarter of a million savers with money in Icelandic bank Icesave, which went down in October 2008.
Closer to home, as far as financial advisers are concerned, it has also paid out hundreds of millions of pounds to investors who put money into Keydata products.
Under the leadership of chief executive Mark Neale, the FSCS has done more recently to make people – the young especially - aware of the protection that the scheme provides. Indeed, it has even used big personalities such as TV and radio presenter Fearne Cotton to get its message across.
Whether this communication initiative has worked remains a moot point. Late last month, a survey conducted by peer-to-peer lender RateSetter indicated that lack of awareness about the FSCS among consumers remains low. RateSetter went on to say the FSCS was ‘inefficient’ and ‘outdated’.
Outdated the FSCS is not. But woefully inefficient it can be on occasion...Of course, RateSetter has an agenda, namely promotion of its own ‘pioneering’ protection fund – the Provision Fund. But it has only half a point.
Outdated the FSCS is not. But woefully inefficient it can be on occasion, even though its mission statement is quite clear: “To provide a responsive, well-understood and efficient compensation service for financial services, which raises public confidence in the industry.”
For the past 17 months, I have kept a close eye on the progress of an FSCS compensation claim made by Dr Derek Hopwood OBE, a retired 81-year-old academic from just outside Oxford. And what I have observed – and experienced when intervening on his behalf – has made my toenails curl in horror. In my view he has been treated appallingly by the FSCS and contractors acting on its behalf (Deloitte).
As the OBE suggests, Dr Hopwood is a formidable individual of fearsome intellect. He received his award in the 1998 New Year’s Honours list for services to Middle East studies, primarily as a result of sterling work as director of the Middle East Centre at St Anthony’s College, Oxford University.
In 2003, he received an award from the British Society for Middle Eastern Studies for services to the subject, and he has written a bookshelf’s worth of publications on his specialism.
But even this good doctor, with all his brainpower, has been left bewildered by the machinations of the FSCS.
Dr Hopwood’s claim stemmed from an Arch Cru investment made through an independent financial adviser firm that has since gone out of business.
He first submitted his claim back in June 2013 which included all the information requested at the time by Deloitte. Between June 2013 and April 2014, he then received four demands from Deloitte for more information relating to his claim – and two requests to confirm who he blamed for his investment losses.
His case was passed round a total of four Deloitte case officers, each one starting on the case afresh. All frustrating, especially when Dr Hopwood was asked repeatedly for details he had already submitted.
In early April this year, he was asked by Deloitte to provide his bank details, suggesting he was about to receive compensation. A day later, he received a letter from the FSCS stating his claim had been rejected.
The unhappy doctor, understandably, fumed like a bubbling Hookah. His claim had been turned down because he had not provided sufficient evidence to support it.
Undeterred, Dr Hopwood battled on, leading to his case being reopened in July this year. A month later, he was asked again to provide his bank details, only to be met with a wall of silence.
On October 11, in desperation, he contacted his latest Deloitte claims handler asking whether a final decision had been made. Yet more radio silence.
On November 10, I took up Dr Hopwood’s case with the FSCS thinking I would be able to speed things up. But my dealings with the FSCS proved equally galling.
First, I was given the ridiculous information that ‘Mr Malin’s case’ would be investigated as a ‘matter of urgency’. Mr Malin was, believe it or not, the latest Deloitte employee to have overseen the claim.
Two days later, an FSCS letter informed Dr Hopwood he would after all finally receive his compensation. At my insistence a complaint about Deloitte’s handling of this case is currently with the FSCS’s ‘customer escalation team’. Escalation of what, one has to ask.
At my insistence a complaint about Deloitte’s handling of this case is currently with the FSCS’s ‘customer escalation team’In response to a previous article I wrote in Financial Adviser, FSCS’s Mr Neale wrote a letter defending its handling of Arch Cru claims, stating it had actually decided on more than 93 per cent of cases, paid compensation on 84 per cent of claims and only had 22 complaints. Surely that is 22 too many.
I hope he will now have the good grace to admit that with regards to Dr Derek Hopwood OBE, his organisation’s service levels have been found seriously wanting.
Jeff Prestridge is personal finance editor of the Mail on Sunday
