It has been reported that the Financial Conduct Authority (FCA) has announced that the maximum pay out for Financial Services Compensation Scheme (FSCS) claims will be increased from £50,000 to £85,000 for investment and pension advice.
Currently, the £50,000 limit is the maximum one individual can receive, per firm, for investment provision and intermediation claims. This basically means that if a firm defaults this is the highest amount the individual will receive. This amount will now be increased to £85,000 and this will be applied to all investment advice and not just pension-related investment advice (as had been mooted), as the FCA said it is too hard to differentiate between pension and investment products.
The FCA estimated the changes to the cap would increase the claims on the investment intermediation class by £18.7 million per year, or a total of £74.8 million from 2010 to 2014.
For the life and pensions intermediation class it would increase it by £6 million per year.
The FCA data found there were 3,517 individuals whose claims exceeded the £50,000 cap for investment advice over the period, and 966 for life and pension’s advice.
An FCA spokeswoman confirmed the cap change would not be applied retrospectively.
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