The number of claims made against the sector totalled 397, a fall from 908 in the previous year when the payout came to £1.66m.
Some 52 claims were upheld, compared to 72 the year before, and the average compensation paid was £19,330, down on £23,237.
The compensation paid to customers during the year related to firm failures which occurred in previous financial years, such as claims against the firms Principal Mortgage Services and Fuel Investment Groups.
Some £1m was also paid by home loan providers towards the failings of the broker sector, which has been required since April 2019. Under this rule, product providers are required to contribute approximately 25 per cent of the levies falling to the Financial Conduct Authority intermediation classes.
It is 25 per cent for every pound they pay in compensation.
In total, mortgage brokers paid a levy of £4m towards the FSCS, compared to £3m last year. This included £728,000 in administrative costs.
Firms in the home finance intermediation class closed the financial year with a balance of £8.65m, up from £5.37m last year.
The overall levy dropped from £833m to £717m for 2021/2022 as a £116m retail pool from all sectors liable to the scheme was no longer required. The £116m was intended to cover the failings of investment providers, however claims against the sector are expected to come through during 2022/2023 instead.
The FSCS paid out £584m in compensation during the year, the same as 2020/2021, and helped 108,838 customers.
This was primarily driven by firm failures associated with life distribution and investment (LDII) distribution, general insurance provision and investment provision classes. The LDII class paid £263m, down from £323m. The decline was largely due to a £53m reduction in compensation payments for former London Capital and Finance customers as the bulk of their payouts were made in 2020/2021.
