What they mean when they say ...Investors' Compensation Scheme

The Investors Compensation Scheme was designed as the ultimate safety net for investors, and offers them compensation when financial advisers go bust. It is funded by the financial services industry through the Personal Investment Authority (PIA), the retail financial services watchdog.

Since its inception in 1988 the Investors Compensation Scheme has been dogged by rows over contribution levels. This week investment firms called a halt to their contributions to the scheme - which pays out around pounds 2m a month to 150 cases - after Sun Life, a PIA member, won a judicial review. The insurer is questioning the right of the PIA to levy charges on its members to finance the scheme.

Up to pounds 6m of compensation could be withheld from investors There are currently 1,200 individuals in line for compensation.

The judicial review is expected to heard in the autumn.

Since it began, the scheme has paid out pounds 80m to 8,000 investors who have lost money through the collapse of companies such as Levitt Group and Dunsdale Securities.

Pressure comes

off interest rates

This week's cautious quarter-point cut in interest rates in the United States heralds lower rates in other countries. France and Japan have already cut their rates and all eyes are now on the German Bundesbank, which meets next Thursday. The international trend towards lower interest rates takes the pressure off base rates in Britain. Few people expect any increase here before the autumn - and maybe not even then.

Mortgage advice

still dodgy

Some mortgage advisers are still not to be trusted, handing out inaccurate, incomplete or misleading information, says Which? magazine.

In undercover tests, many advisers dwelt on the merits of endowments by stressing their portability and the possibility of an extra lump sum.

They underplayed the advantages of flexibility from repayment mortgages, and the freedom from investment risk. Other options, such as PEP mortgages, were hardly mentioned.