FSCS chief: ‘We need to make sure we can pay compensation fairly’

On the one hand, the Financial Services Compensation Scheme’s new boss is determined to compensate the vulnerable victims of scams in a fair and timely manner to ensure they can get back on track and rebuild their confidence in the financial services world.

But on the other, Ms Rainbird is acutely aware of the impact of the levy on advisers and the advice market, from the money financial advisers stump up to fund the scheme, to the overall sense of ‘the good guys always pay’ that is felt throughout the industry.

Ms Rainbird says: “We’re aware of the challenges and emotion around this subject and we know that without industry funding, we would not be able to pay compensation.

“I don’t have a magic wand to fix the past and we need to make sure we can pay compensation fairly.

“We need to get consumers back on track and restore their trust and confidence in the financial services industry, enabling them to go back into the market.”

So behind the scenes, there is a compensation scheme fighting a number of battles on both sides.

Preventing harm

As a body within the regulatory framework, the FSCS is working with a number of industry partners – from the Financial Conduct Authority to the Money and Pensions Service – to stamp out the number of companies phoenixing in the industry.

This is part of the scheme’s ‘prevent’ pillar – the mission the FSCS has taken on to try to limit the levy on advisers within their sphere of influence and trying to reduce bad outcomes.

But the FSCS puts time, effort and money into its consumer-facing side, too.

Ms Rainbird says: “Anybody who comes to us and contacts us has inevitably had something distressing happen to them.

“They’re confused, they’re angry, they’re upset about their loss. It’s often a really awful set of circumstances.”

Consumer journey

One of the ways the FSCS has improved the customer’s experience with the scheme is by reducing the end-to-end customer journey.

Ms Rainbird says: “Some cases are very complicated. We need to assess them, make sure we have the right amount of evidence and then help people.

“We’ve already reduced the end-to-end journey from 180 days to 120 and we’re committed to bringing that down even further.”

Speaking of arguably the most high-profile case to involve the FSCS since her appointment, Ms Rainbird defended the lengthy wait for some consumers who had invested in London Capital & Finance’s mini-bonds.

She says the LCF case was “very relevant and poignant” but also “very complicated”, adding it was a challenging balancing act to do the right thing for both the consumer and the levy payer.

Ms Rainbird notes: “We need to take the right amount of time to investigate, but also be mindful of people who are waiting for an answer.

“What we can do is manage expectations and commit to the deadlines we do give on communicating to those investors.”

Regulatory background

Ms Rainbird has been the top boss at the UK compensation scheme for almost a year, having been appointed as the chief executive on May 13 2019. She joined the scheme in her 30th year in the industry.

Over the course of her career Ms Rainbird held senior positions at the Royal Bank of Scotland and worked most recently as the bank’s managing director of regulatory affairs. She was responsible for defining and delivering the bank’s strategic engagement with global regulators.

Prior to this, she had worked at ABN AMRO, undertaking a number of leadership and transactional roles within the company.

But the FSCS’s vision for the 2020s – ‘Protecting the Future’ – really turned her head.

The strategy focuses on the four main pillars: prepare, protect, promote and prevent. 

The FSCS wants to: ensure it is prepared for a wide range of possible failure across the sector; protect customers and get them back on track; promote awareness of FSCS protection; and work with industry and regulators to prevent future failings.

Ms Rainbird says: “This strategy was a key reason I applied for the role of chief executive officer.

“I wanted to be able to contribute my experience and expertise to its delivery.”

She adds that since joining the scheme, she continues to be impressed with the work of her colleagues and says the work embodies those four pillars.

“[My colleagues] are committed to delivering the best service to protect customers and rebuild confidence in the financial services industry, and they are equally driven by the need to provide an effective and efficient service to ensure value for money for levy payers.”

Ms Rainbird’s key message, however, was that, behind all the complex terms and large numbers, were people who had experienced something horrible.

She says: “They’re people who are vulnerable, worried, upset, frightened, angry, just generally not in a good place and none of us should lose track of that. 

“[Everyday I see] stories and letters from people who are exactly that – people – and we should never, ever as an industry forget that.

“We should keep that in our minds as we go about doing our business. These are people whose futures have been fundamentally changed, and we shouldn’t lose sight of that.”

Imogen Tew is a reporter at Financial Adviser and FTAdviser