The Financial Services Compensation Scheme says that a surge in complaints about SIPPs over the past year was one of the "main drivers" of a growth in complaints, according to its annual report.

During the year the FSCS paid out £176m in compensation to consumers in relation to investments, pensions and financial advice.

The FSCS said that during 2024/25 its compensation workload was “mainly driven” by unsuitable self-invested personal pensions (SIPPs), investment advice and defined benefit pension transfers as well as insurance firms that had failed in previous years.

SIPP operator firm failures were a big part of its workload along with more complex advice cases, it said.

The FSCS said during the year it paid out more than £110m in compensation to customers who had received unsuitable investment, pension and self-invested personal pension (SIPP) advice.

It also paid approximately £60m in compensation in relation to SIPP operator failures and subsequent claims made by their former customers.

The body said that during 2024/25, customer compensation in the Investment Provision class totalled £65m, with over 90% of compensation relating to SIPP operator failures.

Despite the rise in SIPP workload the FSCS paid out less in compensation overall. The compensation paid out during the year was £326m, nearly £100m less than the year before. This reduction was helped by the fact there were no major insurance company failures.

The Financial Services Compensation Scheme said it recovered more than £56m from failed firms over the past year, up nearly £2m on the £54m recovered the year before.

This recovered money was used to fund the FSCS's compensation payments to consumers whose firms failed during the year.

The industry-funded safety net steps in to pay compensation of up to £85,000 per successful claim to consumers. In some cases it can pay more if monies are recovered from failed firms.

According to its annual report published this week, the industry compensation body’s recoveries were equivalent to 17% of its total compensation costs.

Among other key figures in the report:

• There was a big jump in the number of people compensated, compared to the previous year: up from 19,008 to 32,634
• There was a fall in the number of regulated firms declared in default from 51 in 2023/24 to 45 in 2024/25
• There was a rise in the number of firms where compensation was paid from 447 to 477 (this included firms which were declared in default in previous years).

The annual report also shows that the pay package for the new CEO Martyn Beachamp has risen considerably from his predecessor Caroline Rainbird, who left in October 2023 with Mr Beauchamp stepping in his interim CEO. The pay package for the FSCS CEO is now £405,000 compared to £341,000 for his predecessor, according to the annual report.

The report also reveals that Ms Rainbird was paid compensation for loss of office of £105,707 and pay in lieu of notice of £167,097, a total of over £272,000.

Martyn Beauchamp, FSCS’s interim chief executive, said he was proud of the body’s success in chasing failed firms to recover money for customers and the FSCS role in building confidence in financial services.

He 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.”

• FSCS’s Annual Report and Class Statements are available to download as PDFs from the FSCS website.