The Financial Conduct Authority of the UK has changed the compensation arrangements available to consumers under the Financial Services Compensation Scheme.

The regulator has made changes to its co-called compensation sourcebook (COMP) that govern the operation of the FSCS and explained them in a note entitled PS16/14. They relate to:

• an increase in the non-investment (general and pure protection) insurance mediation compensation limit from 90% to 100% for claims in relation to certain types of insurance;
• changes to the eligibility of trustees of occupational pension schemes to claim on the FSCS; and
• changes to make express reference to how the compensation rules apply where a successor firm is in default or to assist the FSCS in handling claims.

On the first point, "in circumstances analogous to the failure of an insurer," the FCA changed COMP 10.2.1R which covers protected home finance mediation and protected non-investment insurance mediation up to a limit of £50,000. In all other cases, it is still 90% of the claim and an unlimited compensatory amount is possible.

These circumstances include action on the part of intermediaries leading to the consumers' claims not being paid, usually be because an intermediary has failed to pass a premium on to the insurer, has failed to pass claim payments on to the customer, or has otherwise failed to do something and thereby unwittingly ensured that a policy issued by an authorised insurer is not in force. In cases where an authorised insurer fails, the Prudential Regulation Authority's rules provide for 100% of a claim under a contract of insurance, provided by that authorised insurer, to be met by the FSCS. The FCA's changes now ensure that consumers receive the same protection from the FSCS, in analogous circumstances, even if the provider or intermediary fails.

The rules contain conditions for payment of compensation by the FSCS to trustees of occupational pension schemes. The FCS has left out trustees of small self-adminitered schemes.