On 6 December 2021, the Financial Conduct Authority (FCA) published Discussion Paper 21/5 ‘Compensation framework review’ (DP21/5). The purpose of DP21/5 is to open a discussion with stakeholders on ways in which aspects of the compensation framework which the FCA is responsible for could be improved. The review is not of the Financial Services Compensation Scheme as an organisation.
In DP21/5 the FCA proposes four key principles for the compensation framework, which build on previous reviews, contextualise the purpose of the compensation framework and help frame the discussion. In light of the proposed principles, the FCA wants to have a discussion with stakeholders about what is appropriate in terms of the scope of protection (chapter 3), eligibility of claimants (chapter 4), compensation limits (chapter 5) and how mutualised risk should be funded (chapter 6).
The deadline for comments on DP21/5 is 4 March 2022 and a Feedback Statement will then be published outlining any further steps the FCA intends to take.