The Financial Conduct Authority (FCA) will begin a review of its rules on the scope and coverage of Financial Services Compensation Scheme (FSCS) payouts for “specific regulated activities”.

In its 2021/22 business plan, FCA chief executive Nikhil Rathi said that he wants the UK regulator “to be more innovative, assertive and adaptive”.

During the FSCS review, the watchdog will assess whether its compensation policy framework “is appropriate, proportionate and takes into account changes in the market and our regulatory approach”.

In the long-term, the FCA wants firms that fail “to do so in an orderly manner” and it intends to be “better aware of those firms most likely to fail so that we can reduce the harm from their failure”.

To support this, the regulator wants “firms to have appropriate capital, liquidity and reserves to cover outstanding redress liabilities”. It believes that this approach will overall “reduce the…

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