The Economic Secretary to the Treasury, Ed Balls, today announced that, following consultation, the Treasury will legislate to allow the Financial Services Authority to make changes to the Financial Services Compensation Scheme (FSCS) to help victims of mesothelioma receive more timely access to compensation.
Ed Balls said:
?Mesothelioma is a disease that has a devastating impact on people?s lives. These changes should help victims of this disease receive more timely access to compensation where the Financial Services Compensation Scheme is involved.?
Under the proposed changes negligent employers and their insurers, who have paid victims of the disease, will now be able to claim a contribution from the FSCS in certain cases. This should help avoid delay in compensation being paid to claimants while the FSCS? liability is being established.
The Financial Services Compensation Scheme (FSCS) provides a consumer safety net in relation to financial services ? it is the UK?s statutory fund of last resort for consumers of authorised financial services firms, including persons affected by the default of such firms. The FSCS can pay compensation if a firm is unable, or likely to be unable, to pay valid claims against it.
Mesothelioma is a cancer of the lining of the lungs or abdomen, which is almost always caused by exposure to asbestos. There are currently over 1800 new cases a year. A recent House of Lords? case (Barker v Corus) decided that liability for damages was to be apportioned among those responsible for the wrongful exposure according to the relative degree of contribution to the chance of the person contracting the disease. The practical effects of this decision were that claims could take much longer to be concluded. Given this, the Government decided to reverse the effects of the Barker judgment to enable claimants, their estate or dependants, to claim full compensation from any liable person. It will then be open to the person who has paid the compensation to seek a contribution from other negligent persons. This was achieved through the Compensation Act 2006.
At present, the FSCS cannot contribute to all cases which have been settled in full by a third party. This prejudices responsible persons (for example an employer who is liable in tort and their insurer) since they are not able to claim contributions against the FSCS and this could lead to delays in paying compensation while liability of all parties is established.
Subject to Parliamentary approval, these changes to the FSCS will allow a person (or the insurer of that person) who has negligently, or in breach of statutory duty, exposed a person to asbestos, and who has settled that claim, to recover a contribution from the FSCS where a mesothelioma victim or other eligible claimant could presently recover compensation from the FSCS. They should assist victims of mesothelioma in receiving timely access to compensation and are beneficial to responsible persons and insurers who, in specified circumstances, can claim contributions from the FSCS.
The changes to the FSCS would be implemented by the introduction of secondary legislation and changes by the Financial Services Authority (FSA) to the rules relating to the FSCS. HM Treasury and the FSA conducted a joint consultation on making these changes. The FSA will make the necessary changes to the rules at the earliest opportunity after they have the power to do so following Parliamentary approval of the Treasury?s secondary legislation.
These changes only relate to the Financial Services Compensation Scheme. The Department for Work and Pensions is currently consulting on wider changes to mesothelioma claims handling more generally.