FSCS recovers £300m from failed firms

The Financial Services Compensation Scheme (FSCS) has recovered just under £300m over the past five years from failed financial services firms, therefore reducing FSCS levies on the industry.

Furthermore, the FSCS recovered billions of pounds following the resolutions of the 2008 banking failures, where the scheme needed to take out loans totalling approximately £20bn from the government at the time of the financial crisis. Though, these loans have now been repaid in full, primarily via the FSCS’s recoveries work.

In a bid to reduce the costs of compensations for its levy payers, the FSCS sought to recover amounts paid in compensation from any party that it considers has a legal responsibility.

In taking recoveries action, FSCS increasingly deals with a number of other Government agencies, such as the Financial Conduct Authority (FCA), the Serious Fraud Office (SFO) and the Insolvency Service. FSCS also deals very regularly with a wide range of insolvency practitioners (IPs).

Commenting, FSCS CEO Mark Neale said: “Recoveries are an unsung part of FSCS’s vital work of compensating customers and contributing to confidence in financial services. I am very proud of the professionalism of our Recoveries Team in navigating complex cases to successful outcomes. Recoveries will play an essential role in our new strategy for the 2020s.”

FSCS general counsel James Darbyshire added: “The usual avenues of recovery we pursue include actions against the firms we’ve declared in default, and their Professional Indemnity insurers. Increasingly, however, we are taking ever more complex recoveries action, and in those instances we tend to make use of our panel of law firms, who have both the expertise and jurisdictional reach to assist us.”

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