2022/23 in review and the financial year ahead

Where has the time gone? It’s hard to believe it’s already July. 2022/23 was yet another busy financial year for the Customer team at FSCS, with thousands of claims decisions made and millions paid to customers in compensation.

I wanted to take this opportunity pause to reflect on the work we’ve delivered over the past year, and discuss the trends we’re expecting to see in the financial year ahead.

Total compensation and decisions

During 2022/23, FSCS paid a total of ￡403m in compensation. This is a 31% decrease on the 2021/22 financial year, which was primarily a result of fewer complex pension claims and a reduction in compensation costs for self-invested personal pension (SIPP) advice claims.

Just under 97,000 claims decisions were made to customers, split between insurance (77,116), advice (13,073) and depositors of failed credit unions (6,355). Our largest number of decisions in a single month was 37,872 in April 2022, of which nearly 32,000 related to the failure of MCE Insurance.

Claims received and paid

28,936 advice claims were received. 26% related to advice given to customers to transfer out of defined benefit (DB) pension schemes – a 10% increase on 2021/22. Self-invested personal pension (SIPPs) related claims, meanwhile, remain the highest claim volume of all products we protect, accounting for 34% of all claims received in 2022/23 (+5% vs 2021/22).

In total, FSCS paid claims made against 563 different failed firms, including 64 which failed in 2022/23. All others relate to firm failures from previous years. Within the total of 64, we protected eligible depositors of five failed credit unions, helping 67,908 customers to get back on track.

In addition to our business-as-usual claims service, FSCS completed the delivery of 7,326 decisions on behalf of HM Treasury as part of the London Capital & Finance (LCF) compensation scheme, which is now complete.

Customer satisfaction

I’m really pleased that over the past year, FSCS has achieved an overall average customer satisfaction (CSAT) score of 86%. This continued an upward trend from 84% in the prior two financial years and 79% in 19/20. We consider this a significant achievement considering we have completed some of our oldest and most challenging claims in the past year.

CSAT is measured at three stages: submitting an application (increased to 92% from 85%), during the claims journey (increased to 86% from 82%), and when the claim decision is issued (remained at 79%). Our continued incremental improvement in CSAT directly relates to improved customer communications (through initiatives such as touchpoint calls) and expectation management throughout the claims journey.

CSAT effort measures how easy it is to interact with FSCS. The score here remains unchanged at 70%. Feedback has helped us to identify three key contributing factors: the amount of evidence required to support the claim, locating evidence which may have been destroyed (e.g. bank statements), and when we have to pause processing a claim if we have been unable to obtain information from third parties for a significant period of time. Next year we will be trialling a proactive data gathering approach for certain claims which will seek to reduce the reliance on customers obtaining this information themselves.

Our CSAT customer response rate has also continued to rise, currently sitting at 18%. This rises to 21% when analysing customers with additional customer care needs. The industry standard is between 7 and 10%, so these are scores for us to be proud of.

In October 2022, our Vulnerable Customer satisfaction score reached an all-time high of 98%, and we ended the year on a score of 87% for direct customers. We are really proud of our customer satisfaction achievements in 22/23, and can’t wait to work together to push these scores as far as possible in 23/24.

The financial year ahead

In 2023/24, we expect to see claims related to advice to customers to transfer out of their Defined Benefit (DB) pension schemes. This is because we are anticipating additional firm failures due to the British Steel Pension Scheme (BSPS) redress scheme.

We also anticipate that SIPP related claim volumes will remain high, with several firms currently being investigated including Forthplus Pensions Limited, Gaudi Regulated Services Limited, Heritage Pensions Limited and Rowanmoor Personal Pensions Limited. We are also seeing an increase in the number of complex claims where there is uncertainty around whether the firm was carrying out activities that fall within the regulatory perimeter, and as such, whether we are able to protect customers of these firms. These types of investigations require an extensive amount of data and evidence for us to be able to reach a conclusion.

In fact, we expect that the general trend of increasingly complex firm investigations will continue in 2023/24, including those requiring an Emerging Issues (EI) investigation. An EI is often related to a group of claims which can’t be assessed in line with our existing processes. This can be for various reasons – for example, a group of claims related to theft, fraud or pension liberation. EI investigations are lengthy and multi-faceted, and may result in some customers not being protected by FSCS - this was the case for three firms in 2022/23.

There is no denying that the year ahead will be challenging, but we remain as dedicated as ever to delivering an effective and continuously improving claims service, as illustrated by the year-on-year improvements we have made in 2022/23. I would like to say a huge thank you to the Customer team and the wider organisation for their continued hard work, passion, and dedication to delivering the best possible customer outcomes in 2022/23 and looking for opportunities to continuously improve our service. ?I am proud of what we have delivered together and to be part of this amazing team! ?

If you would more information on what FSCS has delivered over the past financial year, you can read our Annual Report and Class Statements 2022/23 on the FSCS website: ?https://www.fscs.org.uk/industry-resources/other-publications/annual-report/

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