The majority of the £403m in claims paid by the Financial Services Compensation Scheme in 2022/23 were due to investment and pension advice including SIPP operator failures.

Uncompensated losses upheld on pensions claims came to over £75m, according to the FSCS annual report.

The compensation body paid out to consumers who experienced losses due to 563 authorised financial services firms failing, including 64 that it declared in default over the year.

Compensation was paid to around 68,000 consumers.

Over 430 firms were investigated by the FSCS to confirm they were able to pay claims and whether any of their former clients would have eligible claims.

The FSCS recovered £15m from firms over the course of the year, with £12m used to offset levies. The remaining £3m was passed to customers whose claims were above the FSCS compensation limits.

Levies collected for the year totalled £434m.

Compensation costs relating to SIPP operators were £25m for the year. The FSCS said a reduction in compensation costs mainly related to receiving fewer claims for Liberty SIPP, Berkeley Burke, Guinness Mahon and Greyfriars.

Life protection and investment intermediary claims rose significantly to 9,372 for the year (2021/22: 8,895). There was, however, a drop in the uphold rate to 67% (2021/22: 73%). Average compensation paid for the class rose to £28,102 (2021/22: £25,982).

Compensation costs for the class fell to £203m (2021/22: £263m) due to a reduction in compensation paid for SIPP products and general investment products. There was also a fall in compensation paid out for complex pension claims (from £120m in 2021/22 to £87m in 2022/23).

While the average compensation for complex pension claims decreased, they represented a higher proportion of total claims compared with the prior financial year.

The compensation body’s satisfaction score remained steady at 86% (2021/22: 84%).             

Fiona Kidy, chief financial officer at the FSCS, said: "The past year has been dominated by the rising cost of living, which in turn has also led to a greater focus on people's personal finances. In connection to this, there has also been a greater focus on the protection that FSCS and other organisations offer.

"As ever, we look forward to the year ahead safe in the knowledge that we are prepared for any challenges that may arise. FSCS will continue to play an important role in building consumer trust and confidence in financial services."