Consumer FAQs about FSCS
1. What is the Financial Services Compensation Scheme (FSCS)?
FSCS is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it. FSCS is an independent body, set up under the Financial Services & Markets Act 2000 (FSMA). Our service is free to consumers.
2. Where does FSCS fit in?
FSCS deals with claims against authorised firms (those regulated by the Financial Services Authority) that are unable, or likely to be unable, to pay claims against them. This will generally be because a firm has stopped trading and has insufficient assets to meet claims, or is in insolvency. We describe this as being in default.
The Financial Ombudsman Service deals with complaints against authorised firms that are still trading.
We have produced a guide jointly with the Financial Ombudsman Service (FOS) and the Financial Services Authority (FSA), explaining the separate roles of our three organisations and how we work together.
3. How can I find out if a firm is a 'member' of FSCS?
If the firm is authorised by the Financial Services Authority (FSA) you will have access to the Financial Ombudsman Service and to FSCS.
You can find out whether a firm is regulated by using the FSA's Firm Check Service on its consumer website. You can also find out about the status of a firm by telephoning the FSA's Consumer Helpline on 0845 606 1234. They will be able to tell you if the firm is still authorised to trade, and how to get in touch with it.
4. What if I have a complaint against a firm that is still trading?
You should complain directly to it. If your complaint is not resolved, you should contact the Financial Ombudsman Service.
5. How do you decide whether you can help me?
To qualify for compensation you must be eligible under our rules which are made by the Financial Services Authority (FSA), the independent watchdog set up by government under FSMA to regulate financial services in the UK and protect the rights of consumers. The rules tell us which types of claim are eligible for compensation, and limit how much compensation we are allowed to pay. Different rules and limits apply to different types of claim.
6. Do I have to pay anything to have my claim considered by FSCS?
No. FSCS is a non-profit, independent organisation set up under FSMA. Our service is free to consumers.
7. Why is there a limit to the compensation available from FSCS?
Our rules tell us which types of claim are eligible for compensation and limit how much compensation we are allowed to pay. There are limits to the protection FSCS can provide. (See Question 5).
To be eligible for compensation you must have lost money because of your dealings with a regulated financial services firm. FSCS can pay compensation only for financial loss. For example, for investment claims the compensation we pay would try to take account of the financial position you would have been in had you not invested.
8. Does compensation cover any guarantees I was given?
The fact that the return on your investment or policy was described as 'guaranteed' does not necessarily mean that we can pay you compensation equal to the return you were promised. FSCS can pay compensation only for financial loss. For example, for investment claims the aim of compensation is generally to put you back in the position you would have been in had you not invested.
9. What happens if the firm I am claiming against was insolvent or declared in default before FSCS took over responsibility for compensation (1 December 2001)?
The rules and compensation limits of the pre-existing schemes will apply, although FSCS will handle the claim. Compensation limits and eligibility rules may differ.
10. The firm I dealt with is no longer trading, but FSCS says it cannot help me. Why?
As a fund of last resort, we can only consider claims if they cannot be paid by anyone else. If the firm is no longer trading but still has assets that could meet your claim, we are unlikely to be able to help you. This means that you will need to take your case up with the firm you dealt with.
If you are having problems finding the firm or its owners and wish to pursue your claim, we may be able to provide contact details. Please contact us.
If the firm (or its owners) will not consider your claim, you could take legal advice or contact your local Citizens Advice Bureau for help.
The Financial Ombudsman Service (FOS) may be able to help you make your claim in some circumstances.
A guide to the different roles of FSCS, FOS and the FSA.
