FSCS declares Welcome Financial Services Limited in default
2nd March 2011
The FSCS has declared Welcome Financial Services Limited (WFSL) in default because it has determined that the firm is unable, or likely to be unable, to pay claims against it in relation to payment protection insurance (PPI). This means the FSCS can now start considering claims made against the firm that are protected by the Scheme, including claims in relation to PPI business conducted by the firm on or after 14 January 2005. The FSCS does not cover claims for compensation for PPI business conducted prior to that date.
To assist in its handling of claims, the FSCS has arranged to use WFSL’s claims handling resources. However, the FSCS will remain responsible for all decisions on claims , which will be made in accordance with FSCS rules, and will closely monitor and oversee all steps in the handling of claims. This arrangement will enable claims to be processed as quickly and efficiently as possible.
Funding
The firm’s restructuring arrangements provide for the firm to make payments to the FSCS to fund compensation costs for eligible PPI claims in respect of policies sold on or after 14 January 2005. The firm will also assist the FSCS in handling claims in accordance with FSCS rules. The FSCS expects this to significantly reduce the costs of the default including the costs of handling claims.
The FSCS is aware that the firm sold a significant number of PPI policies on or after 14 January 2005 which are protected by the FSCS and as such the number of claims and amounts of compensation which might be paid are uncertain.
The payments which are made by the firm to the FSCS will ensure that the levy payer is in a better position than would otherwise be the case in an insolvency of the firm. Depending on the level of claims received, there may be no impact on the levy as a result.
The FSCS believes that these arrangements are in the best interests of levy payers.