The use of artificial intelligence, teamed with a new operating model, will help the Financial Services Compensation Scheme to pay out claims more efficiently, according to its interim chief executive.
Speaking to FT Adviser, Martyn Beauchamp said the lifeboat scheme was looking at using AI to help it scour through the tonnes of data and information it receives when investigating claims.
“There's a lot we can do with the kind of AI that's been around for a while now, such as machine learning and especially language processing,” Beauchamp said.
“If we can use that to pick up key words across thousands of pages of documents and PDFs and emails, and there is a way of doing that at scale, then this can help us shrink this amount of information to process and move things from the investigation stage as quickly as possible.
“That's something we are considering and thinking about internally [at the FSCS].”
Data is a significant issue for the FSCS, as the amount of information its staff must process to get to the stage of paying out compensation has grown tremendously.
Beauchamp said the amount of evidence the FSCS gets on average has gone up 89 per cent over the past two years.
But it is not only the volume of evidence which is the problem; he said there were also issues and delays in collecting the information needed to carry out an investigation.
“We usually get contacted by people because they are getting close to retirement”, Beauchamp explained; this means it could be years since the problematic advice was given or the problematic product was recommended.
In one example, Beauchamp said an individual had got in touch with the lifeboat scheme about nine years after he had received poor advice, which ended up being four or five years after the firm had failed.
He explained: “We have to go back in time, and by the time you deal with these, a lot of the people that know anything about the organisation have long gone and the IP probably isn't even there.
“Getting any information is so hard, so that's why we really want to improve on data collection. By bringing as much as we can in house, this will help us deliver better customer experience, productivity and a host of other benefits.”
Moving in-house
In a statement at the beginning of this year, Beauchamp set out how the FSCS would spend almost £9mn increasing its in-house expertise to deal with the increase in complex claims.
This would mean the organisation could reduce the amount it spends on outsourcing in 2024/25.
“We want to move to a target operating model for our advice claims,” Beauchamp explained.
“At the moment, two thirds of our operation is outsourced and our contracts for those end next year and so that will naturally require re-procurement.
