FSA recommends no change to FSCS and FOS compensation limits

The Financial Services Authority has published the findings of its review of the compensation and eligibility limits for the Financial Services Compensation Scheme and for the compulsory jurisdiction of the Financial Ombudsman Service.

In a consultation paper published today, the FSA is recommending no change to the existing limits.

The key findings of the review were that most claims or complaints are still well below the current maximum limits and there is no evidence that consumer behaviour and market confidence are being significantly affected by current limits.

It also says that FSCS limits significantly exceed EU minimum limits, currently 20,000 for deposits and investments are also generally higher than in other EU member states and other major world economies, with the exception of deposits.

There is no evidence of significant or widespread consumer detriment, or distortions to consumer behaviour, either now or in the immediate future that would justify recommending changing the limits.

But the FSAs work has shown that there is a wide range of views among stakeholders and the FSA is therefore consulting on some specific issues.

Where applicable, this consultation is being conducted jointly with the FOS. The case for increasing the maximum limit for ombudsman awards from the current 100,000 to 200,000 is discussed.

The current limits have been in force since the FSCS and the FOS started operating in December 2001, under the Financial Services and Markets Act 2000. The FSA plans to review the compensation and eligibility again at regular intervals.