The FSCS has declared Welcome Financial Services (WFS), the loan advice firm, in default after it admitted it could not pay compensation claims linked to payment protection insurance (PPI) sales.
WFS sold a substantial number of PPI policies to its customers, and a declaration of default opens the way for all those who have claims against the firm to seek compensation, the FSCS says.
However only consumers who bought PPI from the firm on or after 14 January 2005 are elligible to claim.
In a court sanctioned agreement, WFS will make payments to the FSCS to help fund compensation payouts, and the costs associated with handling claims.
FSCS chief executive Mark Neale says the agreement will reduce the costs to levy payers.
The FSCS will use WFSL's claims handling resources to deal with payouts in order to speed up the resolution of claims, though all decisions will be made by the Scheme, it says.
In January, the FSA appointed three more non-executive directors to the strategic board of the Financial Ombudsman Service (FOS), as it prepares for an avalanche of extra PPI claims.
FOS says it expects the number of cases for the year to March 2011 to be 7% higher than last year, but within this total figure, PPI cases have risen by almost 40%.
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From 6 April 2019