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The APPG: Building a framework for compensation and
redress
With this report the All Party Parliamentary Group for Fair Business Banking presents findings from research
conducted for its inquiry into compensation schemes, as well a series of recommendations to build a redress
framework that is more consistent and delivers fairer outcomes.
In his foreword, Hausfeld Partner, Ned Beale highlights:
“Compensation and redress schemes are vehicles deployed to remedy the most sensitive problems in financial
services. They must bear heavy loads. These include delivering justice for large groups of consumers and resolving
complex legal claims without court proceedings.
Schemes have been established in response to some of the UK's most notorious banking sector scandals, including
the HBoS Reading fraud, the collapse of London Capital & Finance, interest rate swap mis-selling and RBS’ Global
Restructuring Group's activities. Outside core financial
services, the Horizon Shortfall Compensation Scheme for sub-postmasters and the BSPS scheme for steelworkers
are two well-known examples.
Yet, to date, there has been no roadmap providing guidance on when and how a scheme should be established.
Their bases are varied: some established by government or the Financial Conduct Authority, others by financial
institutions; some pursuant to legislation, others on a voluntary basis. Whilst they draw their features from a variety of
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12/9/24, 3:29 PM Hausfeld I The APPG: Building a framework for compensation and redress
sources, including statutory inquiries and standing compensation and ADR schemes (notably the Financial Services
Compensation Scheme and the Financial Ombudsman Service) each has its own unique rules.
However, all share a common root feature, namely an issue sufficiently grave to warrant a scheme being established.
It is implicit from this that schemes must be designed to the highest standards and be capable of delivering redress
fairly and efficiently. Regrettably, however, that
has not been the case with many recent schemes.
The APPG on Fair Business Banking has a rich history of casting a spotlight on the most acute problems faced by
banking consumers, including many of the scandals that have given rise to the schemes examined in this report. It is
therefore entirely natural that the APPG would also shine a light on the schemes themselves. That is particularly so
because, as explained in this report, many of the schemes of the past two decades have themselves suffered from
serious problems which have hindered them from delivering the justice that consumers deserved.
Those problems are perhaps not surprising given schemes are established on an ad hoc basis, outside the usual
court and ADR structures. Moreover, they are often established by the institutions within which the problems which
need to be rectified arose in the first place. That creates an inherent risk of conflict of interest.
This report is the UK’s first systematic review of redress and compensation schemes, and the first guide to best
practice when schemes are designed and implemented. We should aspire to a world where the requirement for
redress schemes does not arise in the first place. Indeed, the report proposes a financial service tribunal as a step
towards that goal. However, given that destination is still some way distant, this report is essential reading for anyone
involved in financial services redress schemes or the issues that give rise to them."
The Redress Report in full
MAR 13 2023
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