FSCS flooded with endowment claims

The Financial Services Compensation Scheme FSCS, says it has received unprecedented numbers of endowment claims in the first six months of the financial year 2005/06. In the half-year to end-September, nearly 10,000 new endowment claims were received by the FSCS against a January forecast of 7,000 for the full year.

The FSCS now estimates that as many as 22,000 new endowment claims will be received during 2005/06. Loretta Minghella, Chief Executive of FSCS admitted that the number of claims submitted was "way beyond our expectations". However, the uphold rate for endowment claims is steady at 39% whilst the average compensation payment per claim has fallen from £2,700 to £2,300 per claim.

Among the FSCS's other main areas, claims over mis-sold precipice bonds were at a lower rate than expected. The FSCS is now forecasting that it will receive 2,000 new precipice bond claims this year, as opposed to 2,700. The uphold rate has increased slightly to 88%, whilst the average payout has fallen from £8,200 to £6,800.

The FSCS now expects that it will need to complete around 15,000 claims during the year - as opposed to an original forecast of 7,000 - and will need to use significantly more funds to enable it to process and pay higher claims volumes.

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2005-11-16 14:35:54 © Moneyextra.com