Claims process
FSCS will send an application form to each customer of the failed firm inviting them to make a claim for compensation. To receive compensation from us, customers have to be eligible for compensation under our rules. There are limits to the protection available.
We aim to pay compensation as quickly as possible (96% are paid within two weeks for credit union claims) although this may not be possible in the event of a complex or problematic failure, or if delays occur because of factors outside our control. For example:
- we may have difficulty getting hold of important files;
- we may be waiting for information from the liquidator or the firm;
- we may have many claims arising from a particular default, which will take time to process.
If any depositor is facing particular hardship we will try to prioritise their claim.
When we pay a claim we take an assignment of rights which gives us the right to try and recover money from the failed firm to reduce the cost of compensation to levy payers.
Amounts owed to the failed firm (for example loans, mortgage or credit card debts) are taken into account before any compensation is paid.
Payment of compensation is usually made by electronic transfer or cheque and will be made in the currency of the deposit held.
Compensation limits
The compensation limit for deposit claims is £50,000 (100% of the first £50,000). The limit applies per depositor per institution and covers deposits made in all currencies. Each depositor is entitled to compensation up to this amount, whether the deposits are in sole or joint accounts. The FSA amended our rules to increase the limit to £50,000 with effect from 7 October 2008. For claims against deposit-taking firms declared in default between 1 October 2007 and 6 October 2008, the maximum level of compensation is £35,000 (100% of the first £35,000). For claims against deposit-taking 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).
