FSCS slammed as ‘outdated and inefficient’

A new survey has claimed less than half (47 per cent) of British adults are aware of the Financial Services Compensation Scheme, despite its own data suggesting the figure was more like 63 per cent.

Peer-to-peer lending platform RateSetter commissioned a survey of 2,013 UK adults, which found that 22 per cent would not be worried if the scheme ended, while 18 per cent thought new regulation to prevent the collapse of banks meant that the FSCS was less relevant.

These findings come despite a Financial Services Compensation Scheme consumer awareness campaign launch in September, which aimed to increase awareness from 63 to 70 per cent by March 2019.

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Ratesetter called for a refresh of the “outdated and inefficient” safety net on savers’ money.

Rhydian Lewis, co-founder and chief executive at the firm, said: “Whilst the FSCS has been important for traditional financial institutions over the last decade, our findings tell us it is no longer fit for purpose.

“It is for this reason that its one size fits all approach has not been adopted by the burgeoning peer to peer lending industry. Instead, unique processes to protect customer’s money have been put in place by the key players in the market.”

The survey also showed that only 39 per cent of those respondents who were aware of the FSCS correctly identified the £85,000 of individual cover it provides, with 11 per cent over-estimating how much of their money is protected.

The majority (71 per cent) stated the scheme should protect an unlimited amount of invested money, while the average based on all responses was £115,137.

The research also revealed that 15 per cent of those who are aware of the FSCS mistakenly said that it protects their money against the pressures of inflation, while 37 per cent said they found the rules around the scheme confusing.