FSCS publishes its 2023/24 Annual Report and Class Statements
The Financial Services Compensation Scheme (FSCS) paid out £423m in compensation to customers during 2023/24.
This included:
- £262m for FSCS’s claims service, which includes claims for investments, pensions and financial advice;
- £160m for customers of failed insurers; and
- £1m for deposits held with failed credit unions.
In its Annual Report and Accounts and Class Statements published today, FSCS outlines the work it carried out during the past financial year. Report highlights include:
- 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.
- 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.
- FSCS maintained a customer satisfaction score of 84% during the year.
- For the 5th year in a row, FSCS was recognised as an Inclusive Companies Top 50 UK Employer.
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.”
FSCS’s Annual Report and Accounts and Class Statements are available to download as PDFs from the FSCS website.
Contact information
Email: publicrelations@fscs.org.uk
Notes for editors
About FSCS
FSCS is the UK's statutory compensation scheme that protects customers of authorised financial services firms that carry out certain regulated activities. FSCS protects deposits, investment business, home finance (mortgage) advice, general insurance, insurance broking, debt management and funeral plans.
FSCS can pay compensation if an authorised firm is unable to pay back money it owes its customers in connection with a regulated activity. FSCS was set up by Parliament in 2001 and is a non-profit organisation funded by the financial services industry.
Declaring a firm in default
Before FSCS can pay compensation to eligible customers, it must be satisfied that a firm does not have sufficient assets to meet claims. It describes this as being ‘in default’. FSCS will declare a firm in default if it is satisfied that there is at least one protected claim, and that the firm is unable to pay the claims itself.
Declaring a firm in default allows eligible customers who have experienced actual financial loss as a result of their dealings with that firm to apply to FSCS for compensation. Some businesses and charities may also be eligible, depending on the type of claim.
FSCS's claims service and other compensation payments
The FSCS claims service handles compensation for products such as investments, pensions, and home finance. These cases usually require customers approaching FSCS to make a claim and providing supporting evidence. These claims are typically brought against a firm for negligence for a regulated activity such as providing financial advice or arranging investments.
Compensation payments for deposits are made when a deposit taker (i.e. bank or credit union) goes out of business. Typically, these customers don’t need to make a claim with FSCS to receive their compensation. In these instances, FSCS can use the data held by the failed firm to make automatic compensation payments.
Insurance compensation is similar in that customers don’t need to contact FSCS to make a claim. FSCS pays policyholders based on the information provided by the insolvency practitioner and the run-off agent handling the failed insurer’s affairs. If FSCS is unable to transfer the customer to a different insurer, compensation includes refunds for unused insurance premiums and covering valid claims against insurance policies. on the type of claim.