The Financial Services Compensation Scheme (FSCS) paid £500,000 in compensation related to claims made against mortgage advisers for 2024/25.
The organisation said this was £300,000 higher than the compensation paid the previous year, mostly because of higher average compensation values. The average value for each claim rose from £13,000 to £27,000.
Around £400,000 in compensation was for unsuitable mortgage advice claims made against Principal Mortgage Services, which was declared in default in 2011.
There were 139 new claims made against mortgage advisers, up from 90 the year before, and 9% of decisions were upheld compared to 18% previously.
No levies were raised from mortgage advisers over the period because carried-over surpluses from previous years met the funding requirements.
In 2023/24, a £5m refund was issued to firms in the home finance classes due to surpluses carried over from 2022/23.
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Overall, the FSCS paid £327m in compensation to consumers, down from £423m previously. Some 45 firms were declared in default over the period.
Martyn Beauchamp, chief executive of FSCS, said: “At FSCS, we are focused on getting people and businesses back on track as quickly as possible when financial firms fail. I’m proud of our achievements over the course of the year. It highlights how vital our work is in building trust and confidence in financial services, and for promoting growth and stability in the UK’s wider economy.
“I am also particularly pleased that our duty to efficiently pay compensation to customers was matched equally by our responsibility to levy payers. In 2024/25, we secured more than £56m in recoveries from those responsible for causing financial harm to consumers. This takes us to over £110m over the past two years alone, with the majority used to offset future levy costs for firms.”
