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News: FSA - No change to compensation limits

City watchdog, the FSA (The Financial Services Authority), has concluded after a review that there should be no change to the compensation and eligibility limits for the Financial Services Compensation Scheme (FSCS).

The review found that most claims or complaints are still well below the current maximum limits and that there is no evidence that consumer behaviour and market confidence are being significantly affected by current limits.

In the case of investments, for example, the maximum FSCS and Financial Ombudsman Service payout is currently 100% of the first テつ£30,000 + 90% of the next テつ£20,000: hence a maximum of テつ£48,000. Indeed the same applies to mortgage advising and arranging.

The FSA's work has shown however that there is a very wide range of views among stakeholders and the FSA is therefore consulting on some specific issues.

Where applicable, this consultation is being conducted jointly with the Financial Ombudsman Service. The case for increasing the maximum limit for ombudsman awards from the current テつ£100,000 to テつ£200,000 is being discussed, for example.

The current limits have been in force since the FSCS and the Financial Ombudsman Service started operating in December 2001, under the Financial Services and Markets Act 2000. However, the FSA plans to review the compensation and eligibility again at regular intervals.

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