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This paper presents a novel FACTS based Static Switched Filter Compensation (SSFC) scheme. This FACTS SSFC scheme is an effective power quality mitigation, voltage stabilization, power losses reduction and power factor enhancement tool for wind schemes interfaced with Smart Grid-Distribution Networks. The FACTS SSFC-device is controlled by two regulators based on a tri-loop dynamic error driven inter-coupled input to VSC controller. The FACTS filter compensation scheme has been fully validated for effective harmonic mitigation, voltage stabilization, losses reduction and power factor correction using the Matlab Simulink software environment. The proposed FACTS Static Switched Filter Compensator Scheme can be extended to integrate other distributed/dispersed distributed generation schemes for power quality and power factor enhancement and compensation requirements such as voltage stabilization and efficient utilization.