FSCS boss critical of firms' record keeping

FSCS boss critical of firms' record keeping

The chief executive of the Financial Services Compensation Scheme has criticised the level of record keeping at some firms.

Mark Neale said that in two of the FSCS’s largest cases in 2016 information was a “persistent stumbling block”.

He said the two firms – both insurers – did not have comprehensive records of their policyholders so the records had to be pieced together from information held by brokers, sub-brokers and finance companies.

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Mr Neale said: “These problems are compounded when, as has happened in a (mercifully) few cases, brokers or sub-brokers have been unwilling or unable to work with us on behalf of policyholders.

“For the most part, we have been able to overcome these problems, but they do cause me concern for the future.

“How would FSCS cope if the failures were on a bigger scale or, for example, if we had at some future date to deal with the failure of a life assurer where there was an immediate requirement on FSCS to meet pension and other critical obligations?”

He added that firms should be able to assemble quickly comprehensive records of their clients, and added that the FSCS should be able to rely on the cooperation of insolvency practitioners and brokers.

The two cases Mr Neale referred to were insurance companies Enterprise and Gable.

The FSCS has so far met 93,302 claims under Enterprise and Gable’s policies at a cost of £49.73m.

It has worked with brokers to put in place new insurance for around 66,393 policyholders and applied £15.06m of premium compensation to finance these new policies.

It has also returned premia for another 16,715 policyholders at a cost of £4.5m.