FSA scraps wholesale compensation fund proposal

The Financial Services Authority (FSA) has shelved plans to establish a safety net fund for the wholesale financial services market. The idea of an additional pool of funds – of between £1bn and £2bn in size – was first floated as part of the FSA’s consultation of reforming the Financial Services Compensation Scheme (FSCS), and the FSA had planned to issue a consultation paper on the proposals in the autumn. However, the idea has not proved popular with the market, concerned that the potential to call on wholesale firms to protect retail customers is a dent to the UK’s competitive position.