Marshall Bailey has been appointed for a second term as chair of the Financial Services Compensation Scheme, and to mark the occasion, he has published an article explaining what he sees as the challenges facing the Service and the financial industry in general.
He began by observing that the FSCS now has a board that is 60% female, while 57% of its senior managers are also female, and also that the organisation is achieving record levels of customer satisfaction.
He continued by explaining that the claims process is now easier than ever, and that, in some cases, customers don’t even need to make a claim to receive their funds.
Mr Bailey continued by explaining that, while the FSCS is primarily seen as a method of providing compensation once things had gone wrong, his organisation was also taking proactive steps to reduce the amount of compensation it might have to pay in the future:
“We are working with our regulatory partners more closely than ever before, and we’ve shared unique data and insights to identify cases of phoenixing, highlight scams, help to prevent firm failures, and proactively contribute to the debate and consultation on matters of utmost importance. These include the future of the consumer investments market, the perimeter and boundaries of our protection and the importance of tackling online financial harm.
“Our work on preventing bad actors from re-emerging, sharing our data, and our submissions to their requests for support, have all had a constructive impact.”
It’s impossible to ignore the fact that the amounts of compensation paid out by FSCS have increased massively in recent years, a trend that was apparent even before the pandemic. Mr Bailey said that he hoped the proactive steps his organisation was taking would reduce the size of the levy to be paid by authorised firms. On the subject of product design, he commented:
“What matters is that these financial products serve their intended purpose: to increase the wealth of their buyers. The investment advice provided to consumers must be helpful, and the variety of investment opportunities available must be welcome, as they help people to save and invest for their future.”
His three recommendations for the future are:
- Standards need to improve across the industry to ensure consumers are better protected
- Additional legislation is required to make life harder for scammers and fraudsters
- Financial literacy levels need to improve, and financial education has an important role to play