More than £54million recovered from failed financial providers in 2023/24, latest data from FSCS shows

• New data from FSCS shows over £54million has been recovered from failed financial providers during the 2023/24 financial year.
  
  
• Recoveries help to reduce FSCS levies on the industry, with the majority offsetting the amount charged to firms.
  
  
• Around £2million of the funds secured has been passed on as an additional recovery for customers who lost more than the FSCS compensation limit when their financial providers went out of business.  

London – In the year ending March 2024, the Financial Services Compensation Scheme (FSCS) has recovered over £54million from the estates of failed financial services providers. These recoveries help to reduce the cost of compensation to the financial services industry, with the majority offsetting the cost of the FSCS levy. Around £2million of the funds secured has been passed on as an additional recovery for customers who lost more than the FSCS compensation limit.

FSCS protects people when authorised financial services providers go out of business by paying eligible customers the compensation they are owed. FSCS compensation is typically limited to £85,000 per person, dependent on the product covered. The service FSCS provides is completely free - funded by the industry through a levy paid by authorised financial firms. 

Research among UK adults has shown that awareness of FSCS helps raise confidence in financial services, with close to nine in ten (88%) people who are aware of FSCS saying they feel more confident taking out a product covered by the scheme[2]. Additionally, knowledge that the industry is meeting the cost of compensation when providers fail is a key driver of trust for almost half (44%) of consumers[3]. 

FSCS usually pursues recoveries against a firm by making a claim in the firm’s insolvency. It can also pursue recoveries against any relevant third parties who may carry legal responsibility for customers’ losses, for example professional indemnity insurers.

Cecile Loosely, Head of Recoveries at FSCS, said: “The recoveries team at FSCS are committed to pursuing the best outcome for our customers and levy payers. Increasingly, we are taking more complex recoveries action that can span international jurisdictions, with some high profile, high value and complex recoveries actions being taken in recent times.

A particular example is our claim against the Gibraltar insurance firm, Green Realisation 123 Ltd, formerly known as MCE Insurance Company Ltd. The specialist motorbike and car insurance firm was placed into administration in late 2021 resulting in FSCS paying out approximately £90million in compensation to the firm’s customers. Through our recoveries process, we have successfully secured £23million from the firm’s estate, and we continue to work closely with the firm’s administrators to recover as much money as possible and further reduce the impact of compensation costs on levy payers. “

James Darbyshire, Chief Counsel at FSCS, said: “We know awareness of FSCS protection can help people to feel confident that their money is safe, contributing to broader financial stability. Ensuring a fair levy for the financial services industry, while maintaining a trusted and effective compensation service, is a priority for FSCS. The ongoing work undertaken to recover the costs of compensation, where reasonably possible and cost effective, helps to reduce the levy and hold those responsible for causing financial harm to account.” 

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