The Covid-19 pandemic has seen businesses work in “unprecedented circumstances”, according to the FSCS chief executive. She tells Insurance Times how the pandemic has allowed the firm to think differently 

Navigating financial crises is something that Caroline Rainbird, chief executive at the Financial Services Compensation Scheme (FSCS) is well-versed in, having spent 30 years working in the financial services sector.

When Rainbird took the helm at the FSCS in April 2019, her first six weeks saw her speaking in front of the Treasury Select Committee about the firm’s work, which she deems was a “quick way to get herself up to speed”. The FSCS is the UK’s statutory insurance compensation service and it protects customers of failed financial services firms. 

By March 2020, the chief executive was helping the business transition to remote working while actively serving customers as the UK was plunged into lockdown after being hit with the Covid-19 pandemic.

While she admits that the last few months “have been tremendously hard for a lot of people,” she is most proud that “we have not lost a single day from an operational point of view; we were lucky to have invested in our technology”.

The FSCS’s customer service satisfaction level has improved over lockdown.

Prior to the FSCS, Rainbird worked at RBS, joining in 2009 - just after the 2008 financial crisis - holding several senior positions, including director of the corporate services division.

Earlier in her career, she worked at ABN AMRO Bank N.V in four different roles, including chief financial officer and executive director, head of investment banking exchange.

Fast forward to 2021 and the UK seems to be heading for yet another financial crisis with the aftermath of the pandemic unravelling.

Being prepared

Being prepared is something high on the agenda of the FSCS, as it is one of its four strategic pillars. 

Rainbird says: “We need to be prepared for what’s coming down the line. We are making sure that we are as resilient as possible and that we can respond appropriately.”

But she admits that there is going to be a lot of financial and economic challenges ahead post-pandemic.

Historic failures

In November last year, the FSCS set a supplementary levy of £92m because of “historic failures”, which by nature take longer to compensate - the firm received some criticism that this was too high.

“The claims that we are seeing are unfortunately higher than we had anticipated, more complex and there is potentially more compensation [to pay]. It’s a very difficult thing to ask in the current environment for more levies to be paid,” she says.

The service has seen a higher number of claims around pension advice; these have been more complex and the compensation has been higher.

The FSCS is funded by the insurance industry, Rainbird continued, “so every penny that we pay in compensation comes from [them]”. 

To guard against this in the future, Rainbird says that the FSCS needs to reduce the number of poor outcomes.

 When asked how the FSCS might do this, she says: “It’s not something that we can unilaterally do. What we need to do is come together with the industry, with the regulator, with governments, with consumer groups.”

It is also still paying back claims from past collapses. 

But reducing the levy is no easy task, but using better education, simpler language for consumers, explaining products clearly, weeding out poor outcomes and bad actors and highlighting scams is a start.

“We have a vast amount of data and insights to identify where some of the issues lie and where across the industry customers, consumers, regulators and ourselves, can look at what are the steps that we can take,” she adds.

“We need to collectively come together and look at how we can make a sustainable and fundamental change.”

Looking forward, the FSCS makes predictions so that it can forecast its levy. It uses collective insights to do this.

Leading by example

Rainbird is also proud of the increase in female representation on the FSCS board; this figure has increased from 27% to 54% under her leadership. The firm has exceeded its 2022 board representation target already. 

When asked what she would say to diverse and ethnic minority candidates looking to join the insurance industry, she says: “The world is your oyster, believe in yourself, reach for the sky”.

This she says is something that her mother always encouraged. 

And  she believes in leading by example. She says: “People have good and bad days – I think it has helped for people to know that as senior leaders in the organisation, it has been hard for us all.”

Throughout lockdown, the FSCS looked at staff engagement by running quizzes and cookery workshops.

Rainbird’s door is always open to staff - she runs a regular virtual breakout session for them to speak to her freely and she says that these new methods of connecting with people have encouraged the business to think differently.

She has also had conversations with staff regarding the issues brought up by the Black Lives Matter movement, to understand how the FSCS can help with the challenges they face in the workplace and generally. 

As a result, the FSCS’s staff engagement scores have also improved and the firm has moved up 14 places to number 26 on the Inclusive UK Employers Top 50 list.

“Over the last few months, we have got know each other better as an organisation so much better,” she says.

But, in terms of post-pandemic matters, she says: “We are facing a lot of unknowns, but also a lot of opportunities about how we do things differently”.