The Financial Services Compensation Scheme (FSCS) recovered more than £54m from the estates of failed financial services providers in the 2023/24 financial year.
The FSCS revealed around £2m 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.
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 10 (88%) people who are aware of FSCS saying they feel more confident taking out a product covered by the scheme.
Additional research has shown 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.
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.”
James Darbyshire, chief counsel at FSCS, added:
“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.”