04 August 2009 11:27:33
|The FSCS protected 3.5 million account holders in 2008-09.|
Payouts from the Financial Services Compensation Scheme (FSCS) hit £20.9bn between September 2008 and March 2009 as banking failures generated a surge in claims.
According to the fund's annual report, it had previously paid out £1bn in compensation between its inception in 2001 and September of last year.
Chief executive Loretta Minghella said the "extraordinary demands" placed on the FSCS between late 2008 and early 2009 were mainly due to the collapse of Bradford & Bingley, Heritable Bank, London Scottish Bank and the Icelandic institutions Landsbanki Islands and Kaupthing Singer & Friedlanderand.
In total, the FSCS provided compensation to the holders of 3.5 million savings accounts affected by these banking failures.
Market turbulence also led to the FSCS having to deal with two of the biggest investment intermediary failures seen in recent years in the cases of Pacific Continental Securities and Square Mile Securities, Ms Minghella added.
Over the course of 2008-09, enquiries to the FSCS climbed from 73,000 to 234,000.
The FSCS is funded via a levy on firms approved by the Financial Services Authority. It provides compensation of up to £50,000 for holders of savings accounts, as well as protection for customers with insurance policies, pensions, investments and home finance in the event of an institution's collapse.