Case study

NatWest jointly coordinates the refinancing of FSCS’s £1.45 billion RCF

13 Apr 2023 . 3 min read

Protection when financial firms fail

Set up in 2001 under the Financial Services & Markets Act 2000, the Financial Services Compensation Scheme (FSCS) is the UK’s statutory fund of last resort for customers of authorised financial services firms. Its role is to protect UK consumers against financial loss when firms regulated by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) are unable to pay claims against them. In such cases, FSCS steps in and compensates customers.

FSCS, which is independent from the government and financial services industry, and accountable to the PRA and FCA, covers deposits (banks, building societies and credit unions), insurance policies, insurance brokering, investments, pensions, debt management, funeral plans, and mortgage arrangement.

In 2021-2022 compensation payments totalled £584 million to customers of failed firms – all possible due to the levies that authorised financial services firms pay to FSCS.

Successful syndication secures FSCS funding for expected levy capacity

FSCS uses a Revolving Credit Facility (RCF) to bridge the potential funding gap which can occur due to the timing difference between FSCS paying compensation and receiving levies from financial firms.

NatWest has acted as Joint Coordinator and Facility Agent, working closely with FSCS to achieve a successful refinancing.

Linklaters LLP acted as legal counsel for the lending group whilst Clifford Chance LLP advised FSCS on the transaction.

The transaction was highly successful with all of FSCS’s 15 banks recommitting to the new facility.

NatWest committed to help FSCS fulfil its role

Tim Furness, Head of Finance, FSCS, said: “We were pleased to work with our existing bank syndicate to renew FSCS’s credit facility once again. This facility enables FSCS to respond to new firm failures and pay compensation quickly if needed, which helps underpin consumers’ trust and confidence in the finance industry. We are grateful for the continued support of NatWest and the other syndicate members.”

Kim Slater, NatWest, commented: “We are delighted to have been able to coordinate and support this refinancing, which secures the funding required for FSCS’s expected levy capacity over the next 12 months. We are proud to work with FSCS as a key relationship bank and trusted adviser, and, in doing so, to play a critical role in keeping financial services customers safe.”

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The information provided in this article has been prepared by National Westminster Bank Plc (NatWest) for information purposes only and is subject to change from time to time. The information and views expressed should not be treated as advice or a recommendation of any kind. NatWest makes no representation, warranty, undertaking or assurance of any kind (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided and disclaims all liability for any use you, your affiliates, connected companies, employees, or your advisers make of it. NatWest accepts no liability whatsoever for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of this material or reliance on the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

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