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United Kingdom-London: Financial and insurance services
Voluntary ex ante transparency notice
Section I: Contracting authority/entity
Section II: Object
FSCS Claims Handling Services
FSCS intends to award a contract to Deloitte LLP for the provision of claims handling services.
FSCS exists to protect customers of financial services firms that have failed. If the company the customer has been dealing with has failed and can’t pay claims against it, FSCS can step in to pay compensation. FSCS covers claims for home finance, deposits, PPI, debt management, insurance, investments and pensions. To do this FSCS runs an outsource claims model to deal with the fluctuating volumes we have. In 2018 FSCS appointed a transformational partner for our claims processing services, however we have identified that we require specific support in processing some of our most complex claims and require increased contingency. FSCS needs the ability to deal with a volatile financial services market with unforeseeable events impacting the claims types, volumes, and complexity since our previous procurement.
The service provider will perform the following activities across the claims we receive: Evidence checking, including identification documentation to ensure it meets the minimum requirements for the claim type. Monitor and record evidence received. Gather information from third parties (e.g the customer, providers of financial services products, claims management companies or financial regulators) where required and chase as necessary. Determine eligibility of the customer, validity of the claim and complete quantification of compensation — calculation of loss, all in accordance with FCA rules and FSCS’s policies (utilising specialist calculation tools). Review and sign off by an accredited individual. Sanctions checking. Issuing compensation payments and decision documentation.
The initial term of the contract is until March 2023 with an option for 2 further extensions of up to 12 months per extension.
In addition FSCS shall expand the claims handling services during the lifetime of the contract to respond to changes in the portfolio of protection within the financial services industry.
Section IV: Procedure
FSCS intends to award the contract to Deloitte because it is the only firm in the market that has the capability, expertise and sufficiently experienced staff necessary to meet FSCS’ requirements.
Processing and assessing complex pension claims made to FSCS is a technical endeavour requiring a unique set of knowledge and skills. It is not simply an administrative or claim-handling exercise. Any firm/individual dealing with such claims needs to have all of the following expertise:
(a) intimate knowledge of different pension products on the market and the intricacies of how occupational pensions schemes operate, in a constantly changing landscape;
(b) specialist knowledge of the software used to handle pension claims (RECAL); and
(c) ability to understand and apply FCA rules and FSCS’ policies, processes and procedures.
Based on FSCS’ market knowledge and recent contracting experience, FSCS considers that no provider other than Deloitte has the required specialist knowledge, skills, expertise and sufficiently experienced staff to deliver the services to meet FSCS’s requirements for quality and scalability. The complex and bespoke nature of the service (and the vulnerable nature of the customer base who use such services) means that a particularly experienced and skilled cohort of staff is essential for the delivery of the service to the required quality standards. Deloitte has such a cohort of staff (none of whom would be subject to TUPE). FSCS does not consider that it would be possible for any other provider to develop sufficient skills and knowledge nor to recruit and train sufficiently qualified staff within an acceptable time period (FSCS estimates that this would take 12 to 18 months) leading to an unacceptably long transition period given the initial term of the contract would be expected to expire in 2023. Such a long transition period would have an adverse effect on the timely assessment of claims made by claimants including vulnerable people who have lost all their life and retirement savings and would risk destabilising service provision. For all the above reasons, FSCS considers that to award the contract to an alternative provider would lead to an unacceptable degree of risk to the performance of the services and to FSCS being able to discharge its statutory duties.
All of FSCS’ requirements are objectively justified by the nature and complexity of the services and customer base. The absence of competition is not the result of an artificial narrowing down of the parameters of the procurement and no reasonable alternative exists. It is not reasonable to relax any of the above requirements as to do so would expose FSCS and its customers to an unacceptable degree of risk.
FSCS therefore intends to award the contract by virtue of Regulation 32(2)(b)(ii) of the Public Contracts Regulations 2015; the services can only be provided by Deloitte as competition is absent for technical reasons and no reasonable alternative exists.
Section V: Award of contract/concession
Section VI: Complementary information
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Go reference: GO-2020312-PRO-16160774