Miscellaneous Financial Services Compensation Scheme
The Financial Services Compensation Scheme (‘FSCS’) is the scheme for compensating persons, such as consumers, in cases where authorised financial services firms are unable, or likely to be unable, to satisfy claims. The FSCS is administered by the ‘FSCS manager’, a body corporate established under FSMA 2000.
	The Office for National Statistics (‘ONS’) is responsible for compiling the National Accounts – core accounts for the UK economy as a whole that describe production, income, consumption, accumulation and wealth across different parts of the economy. In order to provide accurate National Accounts, the ONS classifies the entities making up the UK’s economy by reference to certain sectors and subsectors.
	The FSCS manager was classified by the ONS in 2020 as a ‘supervisory authority’ and part of the ‘public financial auxiliaries’ subsector within the broader ‘public financial corporations’ sector which means it is not part of central government nor an Arm’s Length Body (ALB) of HM Treasury. This decision was based on its view that the FSCS manager carries out supervisory actions with regard to paying compensation and is able to freely take decisions to ensure it has sufficient resources.
	The decision has the following implications:
the FSCS manager’s new status as a ‘public financial auxiliary’ for ONS purposes means that it is now treated by the ONS in a similar way to the PRA and the FCA; and
given the FSCS manager is no longer regarded as an ALB of HM Treasury, its accounts will no longer be consolidated within HM Treasury accounts.
	The Act makes two changes to the legislative framework as set out in FSMA 2000 to ensure that it properly reflects the FSCS manager’s new status.
	Firstly, the Act removes the requirement that the FSCS manager has an accounting officer. Retaining the accounting officer requirement for the FSCS manager would not be appropriate given the level of independence of bodies classified as public financial auxiliaries. Requirements in FSMA 2000 that the FSCS manager must ensure efficiency and effectiveness in the discharge of its functions and minimise public expenditure attributable to financial assistance will be retained to ensure that Parliament’s interests, including the FSCS manager’s use of public funds, continue to be protected.
	Second, the Act removes HM Treasury’s power to require certain information from the FSCS Manager in connection with accounts. Since the FSCS manager accounts are no longer consolidated within HM Treasury accounts, the information sharing requirement is unnecessary.