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Financial Services Compensation Scheme

Treasury written question – answered on 8th June 2011.

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Photo of Craig Whittaker Craig Whittaker Conservative, Calder Valley

To ask the Chancellor of the Exchequer what the reason is for the time taken to commence the review of the Financial Services Compensation Scheme.

Photo of Mark Hoban Mark Hoban The Financial Secretary to the Treasury

It is essential that the Financial Services Compensation Scheme (FSCS) is able to pay out compensation to all eligible policyholders. Without certainty of payout, consumer protection is substantially weakened. It is therefore vital that the FSCS is able to raise resources in a range of circumstances to compensate consumers effectively.

The rules governing the FSCS are set by the Financial Services Authority (FSA), which has commenced a review of the funding model of the FSCS. They will proceed to a formal consultation and cost benefit analysis once discussions on European directives affecting compensation arrangements have been concluded and the Government's policy on the future role of the FSCS in the context of reform of the regulatory architecture for financial services has been settled.

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