“Internally, we’re focused on building capability for the future, so that we keep pace with the variety and complexity of claims coming our way.
“This includes work on upskilling our people, upgrading our technology, and strengthening our processes and governance where needed. This is vital work in ensuring FSCS is future-fit and prepared to handle anything that comes our way.”
Looking back on 2023
Global events continued to have a substantial impact on the economy in 2023, a trend which has persisted since the pandemic began in early 2020, Beauchamp explained.
“Having joined the FSCS in October, it became immediately clear to me that so much of what shapes FSCS’s work is an echo of the broader external environment – and 2023 was no exception” he said.
Given the amount of time that typically elapses between a consumer experiencing financial harm and a subsequent firm failure that allows a claim to be made to FSCS, many of the customers seen in 2023 are still seeking to address events that happened before this period of instability began.
This is most noticeable in the pensions and investments sector, where claims are often brought for negligent financial advice several years after that advice was given.
A prominent example is the Financial Conduct Authority’s redress scheme for former members of the British Steel Pension Scheme (BSPS) which began in February.
The changes to pensions redress methodology meant that FSCS had to make substantial adjustments to internal processes to ensure it was prepared to handle claims in line with the new guidance.
In total, it has now paid almost £72mn to former BSPS members.
Some advice firms involved in BSPS transfers failed very recently, so the FSCS said it expects to be handling claims well into 2024.
“Financial advice firms such as these made up the bulk of those failing during 2023, continuing the trend of recent years,” he said.
At the time of writing, FSCS had declared more than 50 firms in default during 2023, and said it had progressed some substantial and complex investigations into other firms that have gone out of business and may owe former customers compensation.
“These ‘behind the scenes’ efforts before a firm can be declared in default are often invisible but form a significant part of our work,” Beauchamp said.
“However, it wasn’t all about pensions this year.”
Since the failure of Silicon Valley Bank and Credit Suisse back in March, there has been a greater focus on deposit protection, with FSCS covering £85,000 per person in the event of a bank, building society or credit union failure.
