Society expected 2022 to be the first year of post-pandemic rebuilding, but in reality, it was another year of “great change”, according to Caroline Rainbird, chief executive of the Financial Services Compensation Scheme.
Global events including the war in Ukraine and the wake of Covid-19 meant this year has been extremely challenging at times, with an unprecedented rise in inflation driving a cost-of-living crisis for many, Rainbird explained.
Frequent changes in government during the year led to periods of uncertainty, and undoubtedly had an impact on the speed of progress in some important areas of policy.
“At FSCS, despite these challenges, it has been another year where there has been a lot for us to be proud of,” Rainbird said.
“We have handled several high-profile firm failures, including MCE Insurance Company Ltd, which saw FSCS returning almost £16mn in premiums to thousands of policyholders and paying more than £32m in claims.
“We also saw the end of some long-running pieces of work, most notably London Capital & Finance, with the government’s compensation scheme successfully closing at the end of October after FSCS had returned more than £115mn to bondholders who we had been unable to compensate under our usual rules.”
This brought to a close four years of intensive work since LCF went into administration in 2019, she said.
Rainbird said even with so much change there have also been many things that have stayed consistent for FSCS.
“We have continued providing excellent service for our customers, maintaining our record-high satisfaction scores throughout the year, and delivering 160,000 decisions up until the end of November."
The FSCS has regularly shared insights from its claims data to support the Financial Conduct Authority and Prudential Regulation Authority with their priorities and provide an independent view on many issues.
During the year, the FSCS also published the ‘Balancing act of compensation’ and a series of research reports.
Rainbird said this was so that others in the industry can benefit from what FSCS sees and learns while carrying out its "vital work".
“This is very much a two-way conversation and we have also taken the time to speak frequently with industry groups and other important stakeholders, to understand their views and bring their knowledge in to help us make better decisions and enhance our work,” she said.
“Last year, I shared my hope that 2022 would be a year when serious consideration was given to changing consumer behaviour.
"It has been encouraging to see so many new proposals being brought forward to improve protection and prevent harm, including to broaden access to vital financial advice and improve oversight of appointed representatives.”
Elsewhere, she said for the first time since 2019, the FSCS has also seen a new product coming under its remit with pre-paid funeral plans now eligible for protection – “giving consumers greater confidence in this part of the market”.
“Our research this year showed that more than 80 per cent of consumers who are aware of FSCS feel more confident taking out a product with FSCS protection.”
