The Financial Services Compensation Scheme has recovered more than £54mn from the estates of failed financial services providers in 2023/24.
Data from the lifeboat scheme showed around £2mn of the funds secured had been passed on as an additional recovery for customers who lost more than the FSCS compensation limit.
The FSCS said the recoveries help to reduce the cost of compensation to the financial service industry, with the majority offsetting the cost of the lifeboat scheme’s levy.
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 recovery actions that can span international jurisdictions, with some high profile, high value and complex recovery 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 £90mn in compensation to the firm’s customers.
“Through our recoveries process, we have successfully secured £23mn 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.“
According to research from the FSCS, awareness amongst UK adults of the lifeboat scheme helps to raise confidence in financial services, with 88 per cent of people who are aware of the FSCS saying they feel more confident taking out a product covered by the scheme.
Additionally, for 44 per cent of consumers, the knowledge that the industry is meeting the cost of compensation when providers fail is a key driver of trust.
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.”
alina.khan@ft.com
