What is the 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, covering deposits, insurance, and investments. It is the compensation fund of last resort for customers of authorised financial services firms. If a firm is in default or ceases trading, the FSCS may be able to pay compensation to its customers.
The FSCS is independent of the government and the financial industry, and there is no charge to individual consumers for using the service.
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. The maximum level of compensation for money held on deposit is £85,000 per individual. 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. The compensation is paid for bad advice, negligent investment management, or misrepresentation only.
Insurance business
For long-term insurance business (such as life insurance), 100% protection is offered, with no upper limit on the amount for claims against companies.
Please note, given there are several types of pensions available, they can and do fall under different types of protection offered by the FSCS.
Historic investments and long-term assurance levels may vary from those listed above.
Further information about compensation scheme arrangements, eligibility, and level of coverage is available from the FSCS using its website: www.fscs.org.uk
