Financial Planning Today editor Kevin O’Donnell recently interviewed Financial Services Compensation Scheme interim CEO Martyn Beauchamp at his London HQ about how the organisation is dealing with new challenges and a changing regulatory environment. The full article appears in the latest issue of Financial Planning Today magazine. See below for a link to view the issue.

FP Tell us about your career and how you came to lead the Financial Services Compensation scheme?

Martyn Beauchamp: After post-graduation flirtations with journalism and music promotion, I moved into financial services. My first job was in customer services - still the most challenging job I’ve had and one that taught me most. I was later schooled at GE, where I learned about leadership and went to work across Europe, the Middle East and Asia for organisations including Tesco. Along the way, I found I’d become a purposeful leader who didn’t have purpose at the core of his professional life. When I had the opportunity to join FSCS as interim CEO – the most purposeful team I’ve worked with – it was an easy decision.

FP The FSCS main office is in the City, near Aldgate, close to the East End where I believe your family has its roots, although you grew up in Essex. How has your family background and history shaped you?

MB: My family has deep roots in the area. Mum was born in Whitechapel, and all my grandparents lived in Bethnal Green before joining the great migration east into Dagenham, which was the biggest council estate in Europe at the time. I was the first in my family to get any qualifications and go to university, which I’m very proud of.

FP You have been at FSCS since October 2023, what key changes have you seen since then?

MB: We’ve had an encouraging time in the past year. Our challenge was always going to be implementing our ambitious change programme while maintaining high standards of service for our customers and efficiency for our levy payers. I’m proud to report that we’re on track to achieve this: our transition to a new advice claims handling model is on schedule, while customer decisions are up 18% year on year, quality remains high, and we’ve reached new highs in customer satisfaction.

FP FSCS is currently looking for a permanent CEO – would you be interested in the role and when will a decision be made?

MB: FSCS is a remarkable organisation – one I’d recommend to anyone, including future CEOs. The recruitment process is progressing and an announcement will be made in due course.

FP FSCS has two statutory responsibilities – to pay compensation and to recover money from failed firms. How are you faring?

MB: Our key product is customer decisions. This may or may not result in compensation, based on the rules we must apply. Much of our investigative work results in no compensation and while this “invisible work” often goes unnoticed, it’s vital to ensuring fair and accurate outcomes for our customers and helps keep costs down for our levy payers. Over recent years, compensation has stabilised at around the £400 million mark.

FP How much is FSCS recovering from failed firms – last year it was £50m I believe?

MB: Last year we recovered over £54m. In 2024/25 we expect to recover at least £33m. Recoveries help reduce the FSCS levy and return more money to customers who lost more than our compensation limits - however the value and timing of recoveries can be uncertain, so we’re careful in our forecasting. We pursue recoveries - where possible and cost effective to do so - from the estates of failed financial providers, or other third parties like professional indemnity insurers.

FP Client trust is a key issue for you, I know, and you regularly ask clients for their views. How is  FSCS doing with its trust rating?

MB: Our mission is to provide a trusted compensation service - for customers, levy payers and the wider sector. We assess customer satisfaction on overall experience, ease and trust and our satisfaction rates are consistently high, averaging 84% over the last 12 months.

Our research shows FSCS also contributes to trust and confidence more broadly among consumers. For those aware of FSCS, 86% say we increase their trust in financial services, 91% feel more confident taking out FSCS protected products, and 74% are more likely to invest more if the provider is FSCS protected. That also underlines how FSCS supports the UK’s growth mission.

Personally, I have video calls with customers every month to hear what we do well, and how we can do better. I’m humbled by how willing customers are to spend time talking about FSCS. They really want us to be as effective as we can be.

FP Our readers are mainly Financial Planners and most will pay the FSCS levy. What are you doing to keep levy costs down?

MB: Compensation costs are a key driver of the levy. While we can’t influence how much compensation is due, we work hard to ensure our operations represent value for our levy payers. Not a single hour goes by at FSCS without colleagues actively considering how we can be more efficient to keep levy costs down. Over the last year, three in five of our investigations found the cost of claims should be met from failed firms’ assets rather than rely on levy payer funds. In terms of our management expenses, increases have consistently been below inflation for the last three years.

FP You’re on record as saying that with PPI over, cases are often involving SIPPs and investments and are becoming far more complex. What impact is this having?

MB: In 2019, 31% of our claims were straightforward, involving products such as mis-sold PPI. That’s now around 5%. Over the same period, more sophisticated claims, involving financial advice, SIPPs and investments, have doubled from a third to two-thirds. This rise in complexity means significantly more data gathering is needed to process a claim. In around 24 months, the amount of evidence we receive per claim has increased by 89%. Delivering customer decisions as quickly as possible is important to us. Growing our in-house capability to complement existing resources will help us do this. One focus area this year has been to bring most of our core claims service and our customer contact operations in-house. From April we plan to handle the majority of our advice claims ourselves.   

FP I understand the majority of cases now come via Claims Management Companies – can you give us a percentage?

MB: That’s right, while the proportions vary by product, on balance the majority of our advice claims now come to us via third parties, such as claims management companies or solicitors. Customers can claim with us directly for free and we do all we can, within our modest budgets, to raise awareness of this so customers can keep 100% of any compensation owed to them.

Biography: Martyn Beauchamp is interim CEO of the Financial Services Compensation Scheme   

Martyn Beauchamp was born in Havering, east London. He is a CEO and NED. He was first appointed as a CEO in 2004, leading a financial services organisation in Asia. He was formerly at GE and Tesco with senior leadership experience in financial services across UK, EU, Middle East and Asia. He has a first class degree in Economics with Politics from the University of Leeds and is a Lean Six Sigma Blackbelt and a Citizens Advice Trustee.

• Financial Planning Today magazine: Jan-Feb 2025 issue. You can view more articles like this by subscribing to the magazine. Register for Financial Planning Today website to view registration and subscription options.