Figures from the Financial Services Compensation Scheme show that it paid out a total of £423m in compensation to customers during 2023/24. This included £160m for customers of failed insurers. Publishing its annual statement, the industry body highlighted its ongoing drive to increase its internal capabilities.

Martyn Beauchamp, interim chief executive at the FSCS, said: “Our focus during 2023/24 was on strengthening our core operation while investing in our future readiness.

“We continued to adapt our service to handle increasingly complex activity. In 2019, 31% of our claims were what we would class as straight forward, for example for mis-sold payment-protection insurance. That number is now approximately 5%. Meanwhile, the proportion of more complex claims, mainly linked to customers’ retirement savings, has increased from around a third to two-thirds.”

He added: “In April we opened our in-house contact centre which puts customer conversations at the heart of our office. This is the beginning of a wider strategy to grow our in-house expertise so we can effectively manage the more complex claims that now make up most of our work.

“This shift towards more internal capability will strengthen our control over customers’ experiences while continuing to deliver cost-efficiencies for levy payers. We laid the foundations for this in 2023/24 and continue to make good progress.”