Safeguarding customer deposits when a firm goes bust.

When a firm goes under and custoimer who has paid a deposit for good that will now never be delivered will be ranked as a creditor and in all likelyhood lose all of their deposit.

If you move into a care home the substantial fees will have to be paid from your assets or by the local Social services.

At the time of writing (November 2008) If you have assets in excess of £22,000 you must pay all the fees.

The assets figure includes your home so in effect any property owner will have to meet the full cost. In practical terms the Social Services will pay the fees and claim them back if you do not have sufficient cash.

If you have less than £22,000 you will pay a portion of the fees dependent on te amount of capital you have.

This often comes as a huge shock to relatives and family and is often very upsetting to the family member moving into the care home.
In blunt terms the state will take everything to pay the care home fees until there is only £13,500 left.

At that point the local authority will pay all the care home fees.

How can anyone mitigate this?

The answer is with great difficulty and any action that is seen by the authorities that is simply an artificial way of putting assets out of their reach will result in them pursuing the matter legally.  Do NOT take any action that results in the removal of assets without taking legal advice.

The first thing that should be done by anyone involved  is to understand exactly what the position is. Please see the links at the end of this article for more useful information and resources.

For any family that finds them selves  trying to ensure that their relative is being advised well, being protected, finding the rules and regulations complicated, with an often unwell relative, decisions having to be made quickly it is very stressful.  We strongly recommend you seek help and advice from others.

The other vital step that should be taken is to ensure that the family member involved is claiming all of the benefits that they are entitled to; care allowance, attendance allowance, disability etc etc.  This should be done before the move into the care home if possible.

 The difficulty in this is that many elderly family members will absolutely refuse to accept or apply for any help.  Their pride and independence is at the one time their greatest strength and their greatest weakness. 

There are organisations that will help.  Help the aged, The Royal British Legion and many others have experienced well informed staff who are familiar with all of these issues and in discussing these matters with the elderly.  They can often be of great help to the other family members in ensuring their elderly relative is well advised.

With everyone living longer, continuing improvements in medicine and care this is an issue all of us will face and the sooner you think about it and plan for it the better.

 Direct Gov Guide on paying care Home Fees.

 Direct Gov Guide on Care Home Fees and your home.

Help the aged Guide on care Home Fees

 The FSCS and the Consumer

The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of authorised financial services firms.

This means that FSCS can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA).

Services from the FSCS are free to consumers.

It is important to note that the FSCS is the "fund of last resort" if you are entitled to compensation you must first claim against the firm that originally arranged the product, investment etc. It is only if they can not meet your claim or have gone out of business and are declared in default by the FSCS can the FSCS then consider your claim.

You can read more about the FSCS here where there is also a link to the FSCS web site

The FSA (Financial Services Authority), FOS (Financial Ombudsman Service), and the FSCS (Financial services Compensation Scheme) all have comprehensive web sites and contact details.

If you are looking for financial advice go to an Independent Financial Adviser, most will give you a initial consultation and informal chat to assess if they can be of help without charge.  They will usually offer a fee or commission payment choice and can offer solutions and advice based on the whole market.   

If you are in financial difficulty and need help and advice our advice is to tackle the problem head on by getting some advice.  There are often choices and help available that will not have ocurred to you.  Often simply talking it over with someone who will help you draw a plan of action will make you more positive. 

 The CAB ( Citizen Advice Bureau ) is often a first step for consumers seeking help. You will find a local branch in yellow pages and their web site is here.

They are an an excellent source of advice and often can point you to expert advice if your problem is a complicated or unusual one.

Other bodies that can help are the Royal British Legion for ex-forces personnel they have a welfare section that can offer advice and will be able to guide you to other ex-service bodies for RAF and Navy personnel that will be able to assist.

There is an alphabet soup of bodies out there all performing their own role in protecting the consumer and regulating those that give advice and supply financial products.

In broad terms the F.S.A. (Financial Services Authority) regulates Insurance and investment services, the Bank of England along with the FSA and Treasury regulate banking.  However, Banks sell and provide financial services and products and carry out activities which are regulated by the FSA.

Most consumer complaints regarding financial advice or products are handled by FOS (Financial Ombudsman Service) and if compensation is due and can not be paid by the body responsible then the FSCS (Financial Services Compensation Scheme) will become involved.

Existing Policies Investments Mortgages 

If you have concerns regarding an existing policy/product or previous advice your first step should be to speak to the firm that advised you or sold you the product.  If that is not possible or you are dissatisfied read the section on complaining and investigating.

 Taking New advice or purchasing a new financial product or service.

First check to make sure the firm/person is authorised to give advice by the regulator if they are not you will have little and probably no protection.  It is east to check using the FSA on-line Firm Check service.  Not all financial services/products are regulated, commercial loans and mortgages are not, neither are residential sales and rent back arrangements. 

None of this is of any help if the product/advice service came from an un-regulated adviser or the product financial service was unregulated. Nor will it help if the product/service /adviser was unregulated at the time of the advice.

For most consumers when considering their Mortgage, Pension, investment or insurance policies it will be the FSA who would be the regulator and the FOS that would deal with complaints.You can check our page on the steps you should take if you have grounds for concern over advice or a product here.  

It may not be as straight forward as it might first appears and their are often limits on te compensation that can be paid even if your complaint and loss is found to be valid.  

You can check to see if the firm that gave you the advice was regulated by checking the FSA web site and using their Firm Check service.

Here is a document that describes how the FSA and OFT work together.

Here is one how the OFT and FOS work together.