The Financial Services Compensation Scheme (FSCS)
The FSCS was set up under the Financial Services and Markets Act 2000 and exists to protect clients of Financial Conduct Authority (FCA) authorised firms and covers deposits, insurance and investments. The FSCS can pay compensation to clients who have lost money as a result of their dealings with FCA authorised firms that are unable to pay claims against them, usually because they are insolvent or have stopped trading.
The limit of protection varies between different types of products and is detailed in the Key Features Document where appropriate.
The maximum level of compensation for money held on deposit for firm failures occurring on or after 1 December 2025 is £120,000 per individual, per authorised firm.
Certain temporary high balances will have FSCS protection up to £1.4 million for up to six months. For example, the proceeds from the sale of a main residence or a redundancy payment qualify for this protection limit.
The maximum level of compensation for investments is £85,000 per individual.
Investments covered include stocks and shares, unit trusts, futures and options, personal pension plans and other long-term policies such as endowments.
Compensation covers claims arising from bad advice, negligent investment management ormisrepresentation only.
It does not cover losses caused solely by poor investment performance.
For a claim to be eligible for compensation it must meet ALL of the following criteria:
- the advice you received to buy the investment must have been given on or after 28 August 1988; AND
- the firm that advised you must have been authorised by the appropriate regulator to do so at that time; AND
- you must have lost money as a result of the advice you were given; AND
- the firm (or its principals) no longer has sufficient assets to meet claims for compensation
For long-term insurance business (such as life insurance, and some annuity or insurance-based pensions), 100% protection is offered, with no upper limit on the amount for claims against companies.
For self-invested personal pensions (SIPPs), the protection for investments (currently £85,000 per individual, per firm) applies.
Historic investments and long-term assurance levels may vary from those listed above.
Full details are available via the FSCS website.
