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FCA delays compensation cap introduction until summer

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  • 24/12/2020
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FCA delays compensation cap introduction until summer
The Financial Conduct Authority (FCA) has delayed the implementation of its highly controversial cap on compensation payments as a result of its poor conduct until the summer.

 

The regulator is in the middle of the fallout from the publication earlier this month of two highly critical reports into its oversight of Connaught and London Capital and Finance.

Details of the delay to the complaints scheme changes were revealed in board minutes from November 12, which were published yesterday.

“The board was cognisant of the concerns raised by some respondents regarding the timing of the amendments to the complaints scheme described in consultation paper CP20/11,” the minutes said.

“In light of this, it was proposed that the policy statement on the consultation should not be published until towards the end of Q2 2021.”

 

‘Executives should pay’

The complaints scheme consultation, which was published in July, angered many in the financial services industry and the regulator was forced to extend the consultation period after attempting to use just eight weeks.

It proposed capping compensation payments from the regulator relating to financial loss at £10,000 “unless in exceptional circumstances”.

And three tiers were proposed for goodwill payments concerning distress and inconvenience caused by the regulator:

  • Up to £250 where the complainant has experienced a moderate level of distress or inconvenience;
  • £250-£500 where the complainant has experienced a high level of distress or inconvenience;
  • And £500-£1000 where the complainant has experienced a very high level of distress or inconvenience.

In September, Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair conveyed his frustration with the regulator and said compensation payments should come from executive bonuses.

“The consultation was cosmetic, capping how much they would have to pay while causing distress and inconvenience and capping if they made a mistake at £10,000 per case,” he said.

“Businesses would love to get away with that rather than £355,000 which is the cap at the ombudsman service, and uncapped in court. Only this regulator could do that.”

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