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Firms got £405m bill from FSCS last year

Firms got £405m bill from FSCS last year

Customers of failed firms received a hefty £405m from the Financial Services Compensation Scheme last year.

The consumer lifeboat scheme paid out to 69,980 customers in the 2017/18 tax year.In its annual report and accounts the FSCS revealed the value of self invested personal pension-related claims climbed 7 per cent to £112m in the year.

Around a fifth of claims related to pensions advice but the greatest number of claims in the year related to payment protection insurance with 7,224 received.

Compensation costs climbed from £375m the year before as the scheme said claims handling had become more efficient under its online service. Some 92 per cent of claims are now submitted online.

The scheme also recovered £11bn from Bradford & Bingley and a further £168m from other failed estates, which will help to offset the levies it charges on the industry.

Mark Neale, chief executive at the FSCS, said: "The rising tide of pension-related claims underlines the risks consumers face as they make increasingly complex choices about financing retirement and show the importance of raising awareness of FSCS protection outside of deposits."

Consumer awareness of the scheme has reached a record 81 percent.

Mr Neale said many compensation claims have become more complex but added: "Our investments and partnerships mean that FSCS is now better able to handle major failures or another financial crisis should it arise."

The scheme saw customer satisfaction rise to an average of 79 per cent and trust increase to 83 per cent. The most common methods of compensation payment are bank transfer and cheque at 45 per cent and 44 per cent respectively.

Mr Neale added: "When we set our five-year strategy in 2014, we wanted to ensure the interests of all of our stakeholders were reflected. We set out seven imperatives that I’m pleased to say we have largely delivered. And we have done this against a backdrop of a rise in both the complexity and volume of claims."