Changes to the Financial Services Compensation Scheme's appeals policy could “create an inequality in the distribution of compensation”, according to Howarth Legal managing director, Mandy Howarth.
Changes to the FSCS's appeals process are due to come into force today (February 21).
These changes include the introduction of a time limit of three months that will apply at each stage of the two-stage appeal process.
This means that any appeal submitted after the three-month time limit will not be considered unless there are exceptional circumstances that prevented applicants from submitting the appeal.
The other change is that all relevant evidence and grounds for the claim must be included in the original claim submission as the FSCS will no longer consider new or amended bases of claims at the appeal stage.
In a letter to the FSCS, Howarth argued the proposed changes would be detrimental and said they would apply an inappropriate application of civil litigation conditions to the compensation scheme process.
Additionally, she alleged the policy changes are “unfair and unjust” and do not align with statutory obligations of the Financial Conduct Authority.
She argued the changes demonstrated a “focus on compensation liabilities” falling on the FSCS.
The implementation will create an inequality in the distribution of compensation as consumers who have had access to higher levels of education will have a “significant advantage” over those without the same, she also stated.
No change
Additionally, Howarth argued that the current appeals policy “requires no change” as it is fair, reasonable, and ensures finality and certainty in FSCS decision making.
Howarth claimed the FSCS issued a response to her letter, confirming that the only way to challenge the policy is by way of judicial review.
“I am looking into the same and seeking advice from a barrister on the matter but, in the event the FSCS are correct, if the judicial review has merit, I will need to file this no later than 21 February 2024,” she said.
She added she “strongly believed” this policy was significantly unfair and would have a “catastrophic” impact on consumers if implemented.
A spokesperson for the FSCS said: “Ensuring customers are able to appeal FSCS’s decisions is an important part of our claims process, and we will continue to carefully consider each appeal that comes to us on its merits.
“FSCS announced its new appeals policy back in November through its website and representatives’ newsletter, three months before the changes come into force on 21 February.”
They also said that individual customers also receive decision letters at the end of their claim which explain the new time limit and signpost them to the full appeals policy.
Additionally, the changes aim to bring more “finality” to the scheme's decision making and encourage customers who are unhappy with their decision to bring appeals at a time when the issues are most fresh in their mind.
“It is standard practice for appeals to be subject to a time limit, and we believe these are reasonable changes which help FSCS deliver on its responsibility to administer the compensation scheme efficiently and effectively,” they added.
tom.dunstan@ft.com
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