The bill for compensating victims of bust financial firms fell by more than a third to £347 million last year, when expensive claims for major banking failures were replaced by smaller PPI claims.
The figures from the Financial Services Compensation Scheme could trigger anger among the investment community, who were hit by a £44 million rise in the levy to pay for next year’s FSCS in April. At the time, the FSCS said: “The levy has increased by £44 million… [after] an up-to-date analysis of claims paid in the previous year and claims assumptions for 2012/13.
The main driver of this increase is the potential claims resulting from high-profile investment failures such as MF Global and CF Arch Cru.”
Today the FSCS said that although it received almost 97,000 new claims during the year — more than double the number of a year earlier — the average pay-out had been £4362 in 2011-12, down from £6640 the year before. That left its total bill sharply lower than 2010’s £535 million.
The FSCS also said it had received cash back from the estates of firms which collapsed at the height of the credit crunch. Last year it recovered £673 million for the major bank failures of 2008/9 and £30 million from the estate of Keydata, the investment firm which collapsed in 2009.
