FSA proposes compensation scheme reforms

Currently the FSCS is funded by 12 contribution groups organised into five sub-schemes which are linked to FSA fee blocks, and the business carried on by each participant firm determines the sub-scheme into which it falls. The Discussion Paper proposes to divide the scheme into five broad classes: life and pensions; securities, mutual funds and derivatives; deposits; general insurance; and mortgages. It suggests four options for future funding: Option A: The five broad classes would constitute the scheme’s funding base. Within each class all compensation costs would be pooled and the...