The chief executive of the Financial Services Compensation Scheme has questioned the need for "unauthorised actors" as she predicted “more heartache” caused by financial scams in 2022.
Speaking to FTAdviser, Caroline Rainbird said that in 2022 the FSCS expects compensation linked to pensions and investments to reach their highest level to date, driven in the main by self-invested personal pension operator failure and complex advice claims
Rainbird added: “Sadly, I also expect 2022 to feature yet more heartache caused by financial scams, ranging from out and out fraud to the grey area of unauthorised individuals playing their part in peoples' investment decisions.
“I question whether in a market where we have large numbers of regulated advisers we have a need for these unauthorised actors who cause a lot of distress and loss to people simply looking to invest for the future.
“Much of this harm will continue to happen online and I truly hope much of this will also eventually come within the scope of new legislation.”
As FSCS goes into its 21st year, the industry is facing an estimated levy of £900m.
“This amount of compensation is simply too high, driven by an inexcusable number of poor outcomes for consumers,” Rainbird said.
“Collective action is needed throughout the industry and regulatory landscape for this to change. From the plans I have seen so far, I believe 2022 will see us make some good progress but we should challenge ourselves collectively to go further and faster.”
Rainbird said it plans to implement improvements to how it works for the benefit of customers and levy payers alike and will continue to promote the service over the coming year.
Commenting on the FCA’s new rules on fee caps for claims management companies, Rainbird said she was “very pleased” with the fee caps.
From March 1, 2022, those customers who do choose to use a CMC will have their fees capped at a maximum of £10,000, which will mean more of the money they lost back in their pockets if they are eligible for compensation.
“This change is something we supported, and we hope solicitors and other representatives will follow suit,” she said.
Reflecting on 2021
“When I reflect on what FSCS has experienced during 2021, one of the first things that comes to mind is pensions,” she said.
“Pensions advice and switching claims continue to be the most challenging we work on, and raising awareness and understanding of our protection in this area has been a key focus of our consumer awareness campaigns throughout the year.”
Rainbird explained that supporting former members of the British Steel Pension Scheme has been a significant piece of work and the body has worked together with the Financial Conduct Authority and Financial Ombudsman Service this year to encourage steelworkers to come forward and discuss their options.