FSCS paid out £423m in the past year

The Financial Services Compensation Scheme (FSCS) paid out £423m in compensation to customers during 2023/24.  

The data showed that £262m for FSCS’s claims service, which includes claims for investments, pensions and financial advice with paid out £160m to customers of failed insurers and £1m for deposits held with failed credit unions.  

The FSCS recovered £54m from failed firms to help ensure those responsible for financial harm are held to account. The majority (approximately £52m) was used to offset FSCS levies for firms. The remaining £2m was passed on to customers whose losses were above FSCS’s compensation limits.  

FSCS paid compensation to customers who had experienced losses from 447 different authorised financial services firms, including the 51 that FSCS declared in default during 2023/24.  

Whilst the FSCS closed out 14 complex firm investigations that each averaged 15 months of work. Following these investigations, all but one resulted in the decision that compensation may be owed. This preparatory work included engaging with third parties and carrying out legal analysis to determine whether claims were FSCS protected. 

Martyn Beauchamp, FSCS’s Interim Chief Executive, said “Our focus during 2023/24 was on strengthening our core operation while investing in our future readiness.  

“We continued to adapt our service to handle increasingly complex activity. In 2019, 31% of our claims were what we would class as straight forward, for example for mis-sold payment-protection insurance (PPI). That number is now approximately 5%. Meanwhile, the proportion of more complex claims, mainly linked to customers’ retirement savings, has increased from around a third to two-thirds.  

“This has resulted in the amount of evidence we receive per claim increasing by 89% since 2021/22. At the same time, we are dealing with larger and more multi-faceted failures such as SIPP operators that require more time, expertise and resource to investigate. 

“In April we opened our in-house contact centre which puts customer conversations at the heart of our office. This is the beginning of a wider strategy to grow our in-house expertise so we can effectively manage the more complex claims that now make up most of our work.  

“This shift towards more internal capability will strengthen our control over customers’ experiences while continuing to deliver cost-efficiencies for levy payers. We laid the foundations for this in 2023/24 and continue to make good progress.”