The Financial Services Compensation Scheme has said it will likely pay out £372 million in compensation in 2024/25, up from a previous estimate of £363 million. The 2025/26 total could be as much as £394 million.
The Financial Services Compensation Scheme (FSCS) was set up in 2001 and operates independently of the government and financial services industry. The FSCS’ stated aims are that it “provides protection when firms fail” and “helps put people back on track”.
The FSCS is funded entirely by levies paid by financial services firms, offset by money it has recovered from failed firms.
The FSCS has recently confirmed that in 2023/24, it has paid out £423 million in compensation to over 19,000 customers of failed firms. The levy for that year totalled £270 million.
The expected compensation bill for 2024/25 is £372 million, an increase of £9 million from what was anticipated in May this year. The levy has remained at £265 million.
Figures for 2025/26 predict compensation costs of £367 million and a levy of £394 million. The increased levy was blamed on previous years’ surpluses being used up, so there is less to carry over into the next year. However, it is still considerably lower than the 2023/24 levy, which was £625 million.
Increased complexity
+ −As well as bringing claims management in-house this year (managed by PwC), the FSCS has increased claims decisions by 18% and maintained high customer satisfaction scores.
This has not been made easy by a shift in the complexity of cases in recent years. Martyn Beauchamp, interim CEO of the FSCS, says that over two-thirds of cases are now considered ‘highly complex’ and require ‘more specialist resources, deeper investigation and more time to complete’.
Clearly, optimising the time taken to complete a case can help keep costs under control.
When can I make an FSCS claim?
+ −The FSCS deals with clients of failed financial firms that were authorised by the City watchdog, the Financial Conduct Authority (FCA).
Once a firm fails, it generally can’t pay out claims against it, so investors have to look elsewhere for help. The FSCS can pay compensation of up to £85,000 (£170,000 for jointly held investments).
People who lost money after receiving unsuitable professional advice (such as being mis-sold a pension or investment) may be eligible to make a claim. Similarly, clients of firms that failed to carry out sufficient due diligence on their recommended investments might be due compensation.
If you are worried about your investments, pensions, or those of a friend or loved one, the specialist FSCS team at TLW Solicitors can help.
TLW Solicitors’ view
+ −Sarah Spruce, Legal Director at TLW Solicitors, said of the FSCS’ figures:
“Whilst the increasing figures are obviously concerning, what is particularly interesting is what the FSCS’ Martyn Beauchamp has said about the increasing complexity of these claims. TLW Solicitors’ FSCS claims team are certainly seeing this too in the day-to-day cases that they are dealing with.
Given the challenges of these FSCS claims, it is very important that claimants have experienced specialists on their side to ensure that all the right evidence is gathered and correct technical information submitted so that the claim has the best chance of success and they receive the compensation they are rightfully owed.
We understand the financial jargon involved in these cases and can explain this in a straightforward and easy to understand way to our clients. We also make sure that the momentum on these claims is maintained through our case management systems ensuring that reminders are sent to the FSCS and our clients are kept up to date on progress.
Using their years’ of experience, my team pick up any FSCS mistakes, ensuring that our clients receive optimal compensation. An example of this was where a client would have been under-compensated by £10,000 if we had not pointed out to the FSCS that they had missed the terminal bonus on a notional payment in a claim.
We also understand the complex appeals process, so if a claim is rejected, we can advise on what to do next giving our clients the best chances of success.”
How can TLW Solicitors help with an FSCS claim?
+ −Contact us today to find out if you have a claim for compensation. We will review your possible FSCS claim on a confidential, no-obligation basis, explore your options and let you know if you may be eligible to make a ‘no-win, no-fee’ claim.
Call us on 0800 169 5925, email info@tlwsolicitors.co.uk or complete one of the forms below.
It is important to get advice as soon as possible, as strict time limits can apply.
Minimum case values apply.
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