Deposit claims FAQs
1. I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed?
The compensation limit of £35,000* applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are a single or joint account holder. In the case of a joint account, FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise.
This means that each account holder in a joint account would be eligible for compensation up to the maximum limit.
*The FSA amended our rules to increase the limit to £35,000 on 1 October 2007. For claims against deposit-taking firms declared in default before 1 October 2007, the maximum level of compensation is £31,700 (100% of £2,000 and 90% of the next £33,000).
2. What is the position for people who have multiple accounts with banks that are subsidiaries of another bank?
For people who hold multiple accounts in banks that are part of a larger group, if each of the banks is separately authorised by the Financial Services Authority:
- FSCS would pay compensation up to the limit of £35,000 per person, per authorised institution.
If each of the banks is not separately authorised but is covered by the parent company's authorisation:
- FSCS would pay compensation up to the limit of £35,000 once, irrespective of how many different institutions a person held accounts with.
If you have a question about how a bank or building society is authorised, please contact the Financial Services Authority Consumer Contact Centre on 0845 606 1234.
3. What happens if I owe money to a bank, building society or credit union that fails?
Amounts owed to the failed firm (for example, loans, mortgage or credit card debts) are taken into account before any compensation is paid.
If you are a borrower with the same firm this may affect the amount you can claim, as the amount of your deposits may be 'set-off' against any amounts you owe.
If a bank or credit union were to fail, FSCS would consider a depositor's overall net claim. If the borrowings exceeded the depositor's savings, there would be no overall claim against the bank or credit union, and the depositor would not be entitled to any compensation.
For example, if a depositor had a mortgage of £200,000 and savings of £150,000 with the same bank, set off would be applied by the Insolvency Practitioner dealing with the bank failure. As a result, the depositor would end up owing the bank £50,000, so there would be no positive balance and no claim.
If a building society were to fail, FSCS may provide compensation for the overall net claim (as given in the above example). However, it is important to note that if you are a borrower with a building society, different arrangements may apply as there is no automatic 'set-off' on insolvency. However, contractual set off may still apply (particularly in the context of offset mortgages). and set off in the insolvency might be ordered by the court.
4. How long will it take to process my claim?
After a declaration of default, FSCS aims to process all claims within six months. However, the time this takes depends very much on the type of claim. For example, most credit union claims can be completed within four weeks. For other types of claim it may take longer, depending on how complex it is and on some factors that may be outside of our control, such as waiting for information from third parties.
5. What happens if I am a member of a credit union that fails?
To claim compensation from us you will need to complete an application form, which will be sent to you. You must provide proof of your deposit with the failed credit union, which we will then verify against its books and records. If you have kept clear, accurate, records of your deposits and transactions it will help to speed up payment of compensation.
If possible we will issue a cheque for compensation, but we will consider other alternatives for claimants who do not have a bank or building society account.
If you have any questions, or want an update on compensation payments, you can contact us.
6. Are offshore deposits covered?
We do not cover deposits outside the European Economic Area (EEA), or in the Channel Islands or Isle of Man.
7. Does the Scheme cover deposits made in different currencies?
Yes. Compensation payments will be made in the relevant currency.
8. Are deposits held by nominee companies covered?
We cover deposits held in client accounts, for example by solicitors, and may cover deposits held by nominee companies. FSCS does not protect non-nominative deposits.
9. Do you cover deposits made through solicitors and other professionals?
We will cover client account arrangements, which are usually set up by solicitors and list individual depositors, provided the deposit-taker (e.g. bank or building society) is authorised to accept deposits, which would normally be the case.
The Law Society has its own compensation scheme for its members' investment business, so claims against solicitors in England and Wales should be referred to it. Claims against solicitors in Scotland should be referred to The Law Society of Scotland.
However, if the solicitor is holding your money in a client account with an authorised deposit-taker that fails, then your claim is against the deposit-taker and you should ask us to deal with it.
Claims against some other professionals can be made to us, but only if the claim arises on or after 1 December 2001. If your claim is for activities before this date, look at our Claiming compensation booklet for details of the organisations to contact.
