The Financial Conduct Authority may require insurers writing riskier policies to pay more into its Financial Services Compensation Scheme. Firms currently pay into the scheme based on their size, not on the risk their products pose, with much of the recent stress to the scheme caused by the life insurance sector. REUTERS/ The scheme serves as a fund of last resort to the financial services industry. In an attempt to address concerns about the scheme, the FCA has proposed that firms should be required to set aside at least 10% of profits for compensation in future years. It is also intended to make insurers scrutinise more closely intermediaries who sell their products.
The Financial Conduct Authority may require insurers writing riskier policies to pay more into its Financial Services Compensation Scheme. Firms currently pay into the scheme based on their size, not on the risk their products pose, with much of the recent stress to the scheme caused by the life insurance sector. The scheme serves as a fund of last resort to the financial services industry. In an attempt to address concerns about the scheme, the FCA has proposed that firms should be required to set aside at least 10% of profits for compensation in future years. It is also intended to make insurers scrutinise more closely intermediaries who sell their products.