What is the Financial Services Compensation Scheme?

Financial Services Compensation Scheme

The Financial Services Compensation Scheme (FSCS) was established by the Financial Services and Markets Act 2000 to act as a “fund of last resort” available for consumers of authorised financial services providers. The FSCS will deal with consumer’s claims against funds/assets, should the company be in default or it has stopped trading. The FSCS is funded by a levy that is imposed on authorised financial services firms.

The FSCS is free to use for any consumer and to date has paid out more than £326 million in compensation in 2012-2013; it assisted more than 85,000 during this period. The FSCS will protect a consumer’s money that is in a UK authorised bank, building society or credit union up to £85,000 and if the deposits/savings are in a joint account, the FSCS will protect the consumer up to £170,000. Investments and Home finance are covered up to £50,000 per person per firm.

The FSCS will protect:

  • Deposits
  • Insurance policies
  • Investment business
  • Home finance (for those on or after 31 October 2004)
  • Insurance brokering (for policies on or after 14 January 2005)
  • Travel insurance when the policy is taken out alongside a holiday or travel booking (for policies on or after 1 January 2009)

The main objectives of the FSCS are:

  • Aiming to provide a quality compensation scheme that is fair and efficient
  • To provide a cost effective and fully accountable compensation service
  • Working to recover monies from defaulted firms quickly
  • Providing a good working partnership with other regulatory bodies in order to benefit the UK’s regulatory framework
  • Provide regular and easily accessible information to all consumers

Additional Information

Useful Links

Eligibility rules

Provided by the Financial Services Compensation Scheme

Compensation limits

Provided by the Financial Services Compensation Scheme