Endowment Compensation Scheme Heading for Shortfall
Financial Services Compensation Scheme is struggling for funds after being swamped by claims
15th Novmber 2005
A greater than expected number of endowment claims means that the Financial Services Compensation Scheme could be heading for a shortfall.
The scheme is funded by financial services companies and pays compensation to victims of endowment mis-selling who are unable to claim from their financial advisers as they have subsequently gone out of business.
It's expected that the total number of claims this year will reach 22,000 compared to a original estimate of 7,000.
A representative of the scheme acknowledged that the unprecedented number of claims was putting the scheme under strain, but stressed that she expected the service to cope by moving funds from other areas of its operations.
The compensation scheme paid out £175m last year, with successful claimants receiving an average of £2,700, a figure that is expected to fall to £2,300 this year.
Read More: Money Guardian: Endowment Scheme Swamped
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