Compensation limits
The maximum levels of compensation are:
- Deposits: £50,000 per person (for claims against firms declared in default from 7 October 2008).
100% of the first £50,000.*
- Investments: £48,000 per person.
100% of the first £30,000 and 90% of the next £20,000.
- Home Finance (e.g. mortgage) advice and arranging: £48,000 per person (for business conducted on or after 31 October 2004).
100% of the first £30,000 and 90% of the next £20,000.
- Long-term insurance (e.g. pensions and life assurance): unlimited.
100% of the first £2,000 plus 90% of the remainder of the claim.
- General insurance: unlimited.
Compulsory insurance (e.g. third party motor): 100% of the claim. Non-compulsory insurance (e.g. home and general): 100% of the first £2,000 plus 90% of the remainder of the claim.
- General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005).
100% of the first £2,000 plus 90% of the remainder of the claim. Compulsory insurance is protected in full.
* The FSA changed the rules that govern compensation payments on 3 October 2008 to increase the total limit to £50,000. The limit came into effect on 7 October 2008. For deposit claims against firms declared in default between 1 October 2007 and 6 October 2008, the maximum level of compensation is £35,000 (100% of £35,000). For deposit claims against firms declared in default before 1 October 2007, the maximum level of compensation is £31,700 (100% of the first £2,000 and 90% of the next £33,000).
Depositors may still receive a share of their savings above £50,000 back following any distribution of assets as part of the insolvency process for a failed bank. This would be a matter for the insolvency practitioner to determine and any recovery would, by necessity, vary according to the circumstances of the specific failure.
The actual level of compensation you receive will depend on the basis of your claim. FSCS only pays compensation for financial loss.
Compensation limits are per person (per firm and type of claim).
The FSA introduced a temporary rule on 27 November 2008 relating to the merger of building societies, which is effective from 1 December 2008. A merged building society will be able to keep separate compensation limits for customers who already had accounts with both building societies before a merger. As a result, those customers do not lose any protection and retain the FSCS limit of £50,000 for accounts with each predecessor business. Depositors who join the merged building society will only be entitled to the usual FSCS coverage for deposits of £50,000, regardless of whether they open accounts with each of the two merged businesses. The new rule will operate until 30 September 2009. Further information can be found on the FSA's website.
This rule change affects mergers between building societies only, not mergers between two banks, or between a bank and a building society. This is because the laws that affect building societies and banks are different. If two banks merge they have the ability, should they wish, to retain separate authorisations and separate coverage under the FSCS. This is not the case for building societies.
Slightly different limits and rules apply if you have a claim against an insurer or a bank that was insolvent before the FSCS became operational (1 December 2001), or if your claim is against an investment firm that was declared in default before the FSCS became operational.