The U.K. Financial Conduct Authority (FCA) launched a consultation on Wednesday related to proposed changes to its Financial Services Compensation Scheme (FSCS), which serves as a financial backstopfor customers of financial services firms that suffer harm due to investment industry misconduct, and it’s also seeking feedback on possible reforms to the scheme’s funding model.
Specifically, the FCA says it’s considering making certain terms of professional indemnity insurance mandatory; updating limits on consumer coverage; tailoring the funding to better reflect the risks posed by particular practices; adding coverage for debt management firms, extending coverage for fund management; and applying FSCS protection to advice and intermediation on structured deposits.
“The (FSCS) plays a vital role in ensuring consumer confidence in financial services. We want to ensure protection for consumers and fairness for firms that pay for the compensation,” says Christopher Woolard, executive director of strategy and competition with the FCA, in a statement. “We want to have a full debate with all interested stakeholders and this paper sets out the range of fundamental issues we want to discuss.”
The FCA is seeking feedback on its consultation paper by March 31, 2017, and expects to publish final rules and a further consultation paper in the autumn of 2017.
Last week, Toronto-based investor advocacy group the Canadian Foundation for Advancement of Investor Rights (FAIR Canada) said that Canadian policymakers should consider establishing a similar fund in Canada that would compensate victims of frauds that are perpetrated by registered financial services providers.
See: FAIR Canada calls for major changes in yearend wish list