Introduction to Financial Services Compensation Scheme (FSCS)

The United Kingdom’s Financial Services Authority (FSA) introduced the Financial Services Compensation Scheme (FSCS) to ensure the speedy pay out of funds for depositors within a set period when a financial institution becomes insolvent. FSCS regulation is the UK implementation of the European Deposit Guarantor Scheme (DGS).

As part of the monitoring mechanism for financial institutions, which fall within the ambit of the FSCS scheme, the financial institutions are required to submit reports on deposit products, balances, and other data, as required by the prudential authority, from time to time.

FSCS require each bank to provide them the data for all the customers who hold an account or deposit and what are their corresponding balances.

This is an extract that is generated from Temenos Transact where the bank will be able to submit through the regulatory body the list of all customers that the bank holds and the accounts held by these customers and the balances.

This report is required whenever a bank becomes insolvent, FSCS will need to know how much the bank will need to repay the customers. This report is extracted based on an ad hoc request from FSCS or when the bank becomes bankrupt.

This functionality allows banks to generate the Fit for Straight through Processing (FFSTP) and Not Fit for Straight through Processing (NFFSTP) extracts from Temenos Transact based on the UK FSCS regulations act.

There is a pre-requisite parameter application, which the bank will need to configure during the implementation of this functionality. Then then there is a process of customer on-boarding, either individual or corporate customers, and once the customers are created, they can open account or deposits with the bank.

Click here to understand the terms and abbreviations used in describing the Financial Services Compensation Scheme (FSCS) module.