Legal Business Blogs

‘Rather impersonal’: Financial Services Compensation Scheme set to create first legal panel

The Financial Services Compensation Scheme (FSCS), the UK’s statutory compensation scheme for customers of authorised financial services firms, is currently undergoing a tender process to create its first ever legal panel.

The FSCS, which is funded by the Prudential Regulation Authority and the Financial Conduct Authority, handles the majority of claims in-house but has in the past turned to James Roome’s restructuring team now at Akin Gump Strauss Hauer Feld and litigators at Herbert Smith Freehills and Quinn Emanuel Urquhart & Sullivan.

The process is being run by procurement manager Peter Quinn, with involvement from head of legal James Darbyshire. Legal Business understands that the FSCS, which is aiming to have completed the panel by the New Year, has already eliminated a number of firms from the process and is down to a shortlist of competing teams.

The body said in a statement: ‘FSCS is in the process of procuring a panel of legal services’ suppliers which we expect to conclude by the end of the calendar year.

In April the FSCS revealed that £7.2m had been set aside to recover compensation from financial advisers that sold Keydata bonds, which have become known as death bonds, after more than 21,000 small investors lost their money when Keydata Investment Services entered administration in 2009. HSF had been advising the FSCS on litigation aimed at recovering compensation from banks and advisers that backed investing in the bonds.

One senior lawyer involved in the process commented: ‘It was not that vigorous. It is rather impersonal as its being run by some outsourcing governmental group.’