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FSCS pays out £9.4m in compensation for broker failings

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  • 27/06/2019
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FSCS pays out £9.4m in compensation for broker failings
The Financial Services Compensation Scheme (FSCS) paid out compensation worth £9.4m to customers of failed mortgage brokers last year.

In its annual report, the FSCS noted that this was £9m below the original forecast for the year. This surplus was used to offset the levy contribution required from intermediaries, with the remainder rolled forward to reduce the levy requirement for 2019/20.

The payouts are down substantially from the £17m paid out in 2017/18, the vast majority of which were related to Fuel Investments.

In total, 1,624 new claims were made against intermediaries, up from 814 the year before. However, the uphold rate dropped sharply from 42 per cent in 2017/18 to just 11 per cent.

The average payout also fell, from £55,882 to £44,463.

Overall, the FSCS paid out compensation worth £473m to customers of failed firms in 2018/19.

In total, more than 425,000 customers received payouts, with the overall compensation paid up from the £405m paid in the previous year.

Just under 50,000 regulated financial services firms paid levies worth a total of £517m to the FSCS to cover the costs of compensation and running the scheme.

 

Claw backs from failed firms

 

The FSCS noted that it had recovered £4.7bn from Bradford & Bingley to repay the remaining amount owed to the Treasury following the post-crash banking failures, while a further £26m was recovered “from other failures” in order to “reduce the burden on industry”.

The FSCS said it would continue to monitor and pursue other such recovery opportunities.

Caroline Rainbird, chief executive of the FSCS, acknowledged that it was only able to pay compensation to so many thousands of people “because of the firms who paid our levy”.

She added: ““As an important part of our work is to help to both prevent future failures and restore consumer confidence in the financial services industry we introduced our strategy, FSCS into the 2020s: Protecting the Future. 

“It identifies the challenges of the coming decade, and our priorities in meeting those challenges, as it focuses on four pillars: Prepare, Protect, Promote and Prevent.”

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