1. General Q & As

1.1. What is the Financial Services Compensation Scheme (FSCS)?

FSCS is the independent body, set up by statute, which may be able to provide you with compensation if we go bust. FSCS is set up by government, and funded by financial services firms. FSCS covers a range of products for both individuals and small businesses.* Limits apply depending on the product you have bought. FSCS does not charge individual consumers for using its service.  FSCS cannot help you if the firm you have done business with is still trading.

* Trustees of large firm pension schemes and large companies for compulsory insurance may be covered by the FSCS. Please contact the FSCS for further information on the eligibility criteria.

1.2. Where does FSCS fit in?

FSCS deals with claims against authorised firms (those regulated by the Prudential Regulation Authority (PRA)) 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. FSCS describes this as being “in default”.

If a consumer has a complaint about an authorised firm that is still trading they should complain to the firm concerned. But, if after doing that they remain dissatisfied, the Financial Ombudsman Service may be able to consider the complaint. You can get further details at the Financial Ombudsman Service website.

1.3. How can I find out if you are a 'member' of the FSCS?

FSCS does not have ‘members’, however, it covers business conducted by firms authorised by the PRA and the FCA. We are regulated by the PRA or the FCA and our financial services registration number is [Firm to add].

If a consumer has a complaint about an authorised firm that is still trading they should complain to the firm concerned. But, if after doing that they remain dissatisfied, they can take their complaint to the Financial Ombudsman Service. In the unlikely event that [name of firm] stopped trading,  FSCS may be able to help.

1.4. What is my product classified as?

[Firm to confirm classification of product. If the product is covered by the FSCS it will fall into one of the following categories: Deposits (usually held with banks, building societies or credit unions), insurance business, home finance (including mortgage advice), investment business (including endowment mortgages).]

1.5. How much of my money is covered?

FSCS has compensation limits; these are applied per person, per authorised firm. Your product comes under the …[firm to add]... classification. The compensation limit for your product is …[firm to add][The FSCS’s limits are below. Firm to confirm consumers protection based on product classification.]

  • Deposits: the compensation limit increased to 100% of the first 85,000 per person per authorised firm on 31 December 2010.
  • Investments: 100% of the first £50,000 per person per firm (for claims against firms declared in default from 1 January 2010).
  • Home Finance (e.g. mortgage advice and arranging): £50,000 per person per firm (for claims against firms declared in default from 1 January 2010).
  • Insurance Business: unlimited. 90% of the agreed claim with no upper limit. Compulsory insurance is protected in full.
  • General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005). 90% of the agreed claim with no upper limit. Compulsory insurance is protected in full.

1.6. Will any of my other products affect this coverage?

FSCS can only pay compensation for financial loss. If firms share an authorisation they should inform consumers as compensation limits are per person per firm, and per claim category.

1.7. What if I have a complaint?

You should first complain directly to us and we will consider your complaint. But, if after doing that you remain dissatisfied, you may contact the Financial Ombudsman Service, who may be able to consider your complaint.

Even if we are no longer regulated by the FCA or PRA usually we will continue to be covered by the Financial Ombudsman Service and must deal with complaints as if we were still regulated.

1.8. What happens if a firm goes bust while the Financial Ombudsman Service is looking at my complaint?

If this happens, the Financial Ombudsman Service will suspend its investigation into your complaint, as it is unable to assist where a firm is unable to pay claims against it. It will write to you explaining that it has referred your case to FSCS. FSCS will then contact you to explain how it may be able to help.

1.9. Do I have to pay anything to have a claim considered by FSCS?

No. FSCS is a non-profit, independent organisation set up under the Financial Services and Markets Act 2000 (FSMA). It does not charge individual consumers for using its service. It is funded by financial services firms.

1.10. How long would it take to process a claim?

The length of time a claim takes to process will depend upon a number of factors, like the type and complexity of a claim, and the amount of information FSCS needs to gather from other sources. Some of these factors may be entirely outside FSCS’s control, but here are the general guidelines for each claim type:

  • FSCS aims to process standard deposit claims in the majority of cases within 7 days of a bank, building society or credit union failing. Any remaining claims, which are likely to be more complex,  will be paid within 20 working days.
  • FSCS tries to resolve all claims against investment firms, insurance brokers, and mortgage brokers within six months of receipt of your correctly completed application form, or within six months of the company being declared in default (whichever is later).

1.11. Why is there a limit to the compensation available from FSCS?

FSCS’s rules, set by the FCA and the PRA, tell them which types of claim are eligible for compensation and limit how much compensation they are allowed to pay. There are limits to the compensation the FSCS can provide.

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. FSCS does not protect against poor investment performance or market fluctuations. For example, for investment claims the compensation the FSCS pays would try to take account of the financial position you would have been in had you not invested.

1.12. What are the FSCS’s compensation limits?

The FSCS covers business conducted by firms authorised by the FCA and the PRA. The compensation limits are:

  • Deposits: The compensation limit increased to 100% of the first £85,000 per person per authorised firm on 31 December 2010.
  • Investments: 100% of the first £50,000 per person per firm (for claims against firms declared in default from 1 January 2010)
  • Home Finance (e.g. mortgage advice and arranging): £50,000 per person per firm (for claims against firms declared in default from 1 January 2010).
  • Insurance Business: unlimited. 90% of the agreed claim with no upper limit. Compulsory insurance is protected in full.
  • General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005). 90% of the agreed claim with no upper limit. Compulsory insurance is protected in full.

1.13. How does FSCS decide whether it can help me with a deposit claim?
To qualify for compensation you must be eligible under the FSCS rules which are made by the FCA and the PRA, the independent watchdogs set up by government under the Financial Services and Markets Act 2000 (FSMA) to regulate financial services in the UK and to protect the rights of consumers. The rules tell FSCS which types of claim are eligible for compensation, and limit how much compensation they are allowed to pay.

1.14. Can the FSCS compensate firms as well as individuals?

The Scheme was set up mainly to help individuals, although some smaller businesses are also covered. Larger businesses are generally excluded, although there are some exceptions to this. The FSCS’s rules, made by the FCA and PRA, set out which claims are eligible for protection. The rules form part of the FCA and PRA Handbooks and can be found under the redress section. (Please also refer to question 2.5).

1.15. How does the FSCS fund compensation payments?

FSCS is funded by the financial services industry which has to pay levies to the Scheme.  PRA and FCA authorised firms are levied each year. The amount firms have to pay depends on the claims volumes and compensation FSCS is likely to have to deal with that coming year.  FSCS can issue an additional levy during the course of a financial year (up to a current total annual limit of £4.03 billon) and it is able to borrow additional funds if necessary.