The total paid out by the Financial Services Compensation Scheme to customers of mortgage broking firms dropped by £500,000 year on year, from around £700,000 to £200,000 for the year to April.

In its annual report the FSCS revealed that the number of new claims was 52% lower in 2023/24 than in the previous year.

Most of the payouts related to Principal Mortgage Services, which was declared in default in 2011, meaning it had no funds to cover complaints made against it.

The FSCS paid out around £180,000 in 2023/24 to clients of Principal.

paying customers approximately £180k in compensation for claims against Principal.

The rest of the total mostly related to clients of Pave Financial Management, which went into default in 2012.

Customers of this firm received around £20,000 of payouts from the FSCS over the year.

The average value of compensation paid per claim against brokers dropped from £24,000 to £13,000 year on year.

The Home Finance Providers class – made up of mortgage lenders –- is required to contribute to the Home Finance Intermediation class – made up of brokers and distributors – as part of the retail pool levy if required.

However, it was not required to do so in 2023/24.

The Home Finance classes also received a £5m refund this year, as class surpluses, carried over from 2022/23, were not required during 2023/24.