Com­pen­sa­tion for failed in­vest­ments to rise to £85k

The Daily Telegraph - Your Money - - FRONT PAGE - Sam B Brod­beck

In­vestors who lose out when firms go bust could now re­ceive up to £35,000 more com­pen­sa­tion un­der plans un­veiled by the City watch­dog.

The Fi­nan­cial Con­duct Au­thor­ity ( FCA) is rais­ing the limit for Fi­nan­cial Ser­vices Com­pen­sa­tion Scheme ( FSCS) pay­outs from £50,000 to £85,000. It will ap­ply to claims made against failed in­vest­ment firms, ad­vis­ers, mort­gage bro­kers and debt man­age­ment firms.

How­ever, in­vestors will have to wait un­til next year for con­fir­ma­tion of the changes.

The higher com­pen­sa­tion cap would bring pro­tec­tion against th­ese types of losses into line with the cover given for bank de­posits where the bank fails and can­not re­turn cus­tomers’ money.

Com­pen­sa­tion for de­posits was raised ear­lier this year in line with the fall­ing value of the pound af­ter the Brexit ref­er­en­dum.

Com­pen­sa­tion lim­its mits are set per in­di­vid­ual, per firm m and per claim type. So £100,000 spread equally across two in­vest­ment ent firms is com­pletely pro­tected ed un­der cur­rent rules. But £100,000 held with one firm is only cov­ered up to £50,000. 000.

Tele­graph Money has high­lighted be­fore how in­vestors can be left ft short when a firm fails.

Reader Emma Scowen’s (pic­tured) ) mother lost £117,000 as a re­sult of a bond in­vest­ment, but was only awarded £50,000 be­cause the ad­viser who made the rec­om­men­da­tion had since shut down.

The FCA ar­gued the lim­its should be raised be­cause, for in­stance, most peo­ple only use one fi­nan­cial ad­viser, mean­ing they would lose out dis­pro­por­tion­ately if that ad­viser went out of busi­ness.

Providers must be reg­is­tered with the FCA if cus­tomers are to be pro­tected by FSCS cover.

You can find a full list of firms reg­is­tered with the FCA on its web­site.

The pa­per also re­con­firms the reg­u­la­tor’s stance that loan-based crowd­fund­ing, com­monly known as “peer to peer” lend­ing, is un­changed and FSCS pro­tec­tion will not be ex­tended into this fledg­ling area.

To make a claim against firms that have not gone bust, yo you should con­tact the Fi­nan­cial Om­buds­man O Ser­vice. The Ombu Om­buds­man can or­der com­pen­sati com­pen­sa­tion for losses of up to £150,00 £150,000. In­ter­est and other costs may m be added on top of this.

It is only whe where a com­pany has failed and been b de­clared in de­fault th that in­vestors can turn t to the Fi­nanci Fi­nan­cial Ser­vices Compe Com­pen­sa­tion Schem Scheme for help.

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