FSCS vows to improve consumer claims process

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FSCS vows to improve consumer claims process

The Financial Services Compensation Scheme (FSCS) will make further investments in digital technology to improve its online claims process.

Mark Neale, the FSCS chief executive, told FTAdviser the goal was to "handle claims more quickly and keep customers in touch with progress".

The scheme introduced an online claims handling service in 2016, and now receives more than 95 per cent of claims via this route.

Mr Neale said while he considered this a great outcome, there were still other ways in which the FSCS "can ensure that customers are kept in touch with progress".

He said: "Consumers need to know how their claim is progressing, they don't want to be left in limbo, so that is going to be a very important part of the development of our service over the next few years."

In its strategy for the 2020s, published last week, the FSCS said customers found the scheme’s process "daunting, especially for complex claims".

It said people could be put off by the time taken to gather the required information and evidence from third parties and that customers felt the FSCS could provide clearer and fuller explanations of its decisions.

Mr Neale added: "We do provide some updates, but they aren't as good, or as frequent or as timely as we would like them to be. People need to be reassured that their claim is being handled even when it’s a complex claim where we need to do some work to gather the evidence."

The FSCS awarded a contract to Capita in May to provide its claims handling service, which was previously divided between a number of different companies.

The scheme expects to work with the provider to explore digital technology and mechanisation to reduce complexity in the claims handling process.

The FSCS also said it will review the end-to-end claims handling process, and identify opportunities to eliminate many of the current delays that arise from the need to seek supporting evidence for claims from third parties.

Paul Gibson, managing director of Granite Financial Planning, said a lack of communication from the FSCS regarding an ongoing complaint "must be frustrating for consumers".

He said: "A complaint can sometimes take a long time to be resolved so more regular updates should be welcomed.

"Whether Capita can help achieve this is another matter, as I was surprised they were given the contract in the first place given their service record in general."

In January Capita's share price fell more than 40 per cent after the company issued a profit warning and suspended its dividend.

Capita, which employs 69,000 staff providing back-office and IT services for government departments, local authorities, and banks, first ran into trouble in 2016 when it announced a series of problem contracts, including a botched IT overhaul for the London congestion charge, that wiped almost £2bn off its market value in one day.

In the next two years, the FSCS also wants to make consumers more aware of its protection, and this will be achieved in part by working with the new Single Guidance Finance Body (SGFB).

The goal was "to address some of the gaps in the consumers' knowledge and understanding", Mr Neale said.

The body, which was first announced by George Osborne, the previous chancellor, in 2015 is expected to launch in January to replace the Money Advice Service, The Pensions Advisory Service and Pension Wise.

Mr Neale said: "One of the biggest things we can do is to educate consumers better than we have done up to now.

"Consumer vulnerability is a factor, in many of the claims and failures that we have seen a fairly typical pattern is for a consumer to receive a promotion often from an unregulated adviser of a risky investment proposition, of overseas property for example, or carbon trading futures, or storage pods.

"Then the consumer goes to another adviser to open a [self-invested personal pension] Sipp, the adviser doesn't do adequate due diligence, doesn't find out what the consumer is intending to hold within the Sipp and that is where it all goes wrong.

"Better information to consumers about our protection will lead to better choices."

The FSCS paid £405m in compensation in 2017/18. Of this, roughly £185m was accounted for by complex mis-selling claims against pension and investment advisers.

maria.espadinha@ft.com