FSCS increases claim decisions by 18%

The Financial Services Compensation Scheme (FSCS) increased claims decisions by 18% year-on-year in H1. The FSCS said that more than two-thirds of its advice claims are now considered ‘highly complex.’

The levy for the 2024/25 financial year remains as previously forecast in May 2024 at £265m, and no additional levy is expected for the remainder of the current financial year. At the same time, FSCS has continued to secure substantial recoveries and now expects to recover £33m, almost double against May’s forecast. These recoveries made in 2024/25 have been used to offset the levy.

To help the financial services industry prepare for the year ahead, FSCS is publishing its first look at the levy forecast for 2025/26. In 2025/26 FSCS is expecting to pay similar amounts of compensation as 2024/25, at £367m compared to £372m in 2024/25. However, the levy is forecast to be higher than this year at £394m as far lower surpluses will be taken forward.  

Martyn Beauchamp, Interim Chief Executive, said “The levy enables FSCS to support trust and stability in the UK financial services sector, putting customers back on track when they experience harm due to the actions of firms that have since failed.  

“While the levy is projected to increase in 2025/26, as discussed in previous Outlook forecasts, cash surpluses have kept the levy below compensation levels in the last two financial years, as we’ve had significant surplus balances at the start of each year in some classes. This is no longer the case for 2025/26.

“In the next financial year our new operating model will be fully embedded. Alongside this, we are always looking at ways to further improve our claims processes, working hard to find efficiencies without significantly increasing costs.”