FSCS to pay small claims without investigation

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The Financial Services Compensation Scheme (FSCS) will be able to make small claims payouts without even investigating the eligibility of claimants, under rules confirmed by the Financial Services Authority (FSA).

Confirming proposals set out in a consultation paper in March, the rule will allow the FSCS to pay compensation without a full investigation if the costs of investigation are disproportionate to the benefits. The FSA has pressed ahead with the plan despite the fact that half of respondents to the consultation opposed the move. Among the objections were that the rule could end up being applied to large, complex claims, while there were also fears that it could be "a charter for claims management companies and people making spurious and fraudulent claims". However, the FSA stressed t...

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