The Financial Services and Markets Act 2000 - The financial services compensation scheme

The Financial Services Act 1986 operated a compensation scheme for the victims of contraventions of that Act. An entirely separate compensation scheme for the holders of policies of insolvent companies existed under the Policyholders Protection Act 1975. That Act was recast by the Policyholders Protection Act 1997, to deal with the problems raised by the KWLEM failure, although the 1997 Act has for the most part lain dormant. The old regimes are to be swept away and replaced with a unified compensation scheme, although the detail will be contained in regulations made under the 2000 Act. As far as insurance is concerned, the ultimate picture is likely to be that which would have prevailed under the 1997 Act had it been brought into force, in essence confining cover to claims under policies insuring EEA risks.