City watchdog: 85,000 claims enough

City watchdog: 85,000 claims enough

The City watchdog said there should be no increase in the amount of money a customer can get back if their bank, building society or other investment company collapses.

The Financial Conduct Authority believes that the current 85,000 limit is enough to cover the majority of cases. It suggested that the level be reviewed every three years to make sure it keeps pace with inflation.

The FCA said that the current levels represent an appropriate level of consumer protection, in that they are at an adequate level to cover a reasonable proportion of claims. It is consulting on possible changes to the way the Financial Services Compensation Scheme FSCS works. The scheme was unable to fully compensate for a series of high-profile failures.

After the collapse of London Capital and Finance collapsed, ministers were forced to step in after being told by the FSCS that they would be compensated.

The FCA says it needs to catch problematic investment firms before a collapse. In recent years, the FSCS has had to step in time and time again.

The total amount needed to run the FSCS has gone from 277 million to 717 million over the past decade. Most of the money was spent on what the regulators call historic misconduct in the investment sector by firms that went bust.

Sheldon Mills, FCA consumer and competition boss, said: We want consumers to trust in a thriving UK financial services sector, and businesses to be confident that they can bring new products to market. If things go wrong, it is important that consumers have an appropriate level of protection.