The FSCS declared only five regulated firms in default in February and March, sharply down on the 12 firms it declared in default over the same period in 2024.

A declaration of default by the FSCS opens the doors to clients of the failed firms to seek to claim compensation from the FSCS of up to £85,000 per case.

The FSCS is the industry-funded safety net scheme for consumers when regulated firms fail.

The body said the latest crop of firms had gone out of business and were unable to meet claims themselves.

There is no explanation as to why the number of failed firms was down in February and March this year but it may be an anomaly as five regulated firms have already been declared as failed so far in April, including several financial advisory firms.

While the number of firms in default is down, the size of compensation bills continues to be substantial. One of the biggest compensation bills so far this year is for London Community Credit Union Limited (FRN 213743) which was declared in default in January. The FSCS estimates the compensation scheme for this provider could top £15m.

The second most costly compensation bill over the last financial year was for Alexander David Securities Limited (FRN 469150) which was declared in default in April 2024. In May last year the City of London-based advisory firm had 463 claims against it, with 51 rejected and 411 in progress, for investment and pension advice. The investment firm was linked to a SIPP adviser and other firms. The FSCS says the compensation bill for the firm has so far reached £7.4m (see below).

Defaults declared by FSCS from 1 February to 31 March 2025 (5 firms) were:

In the last financial year (from 01/04/2024 to 31/03/2025) the FSCS has declared 45 firms in default.

Of these firms, the top five in terms of compensation paid out (at the end of March) are: