The FSCS is the UK's compensation fund of last resort for customers of authorised financial services firms. We may pay compensation if a firm is unable, or likely to be unable, to pay claims against it. This is usually because it has stopped trading or has been declared in default.
We are independent of the government and the financial industry, and were set up under the Financial Services and Markets Act 2000, becoming operational on 1 December 2001 (although we still cover claims from before this date). We do not charge individual consumers for using our service.
The FSCS covers business conducted by firms authorised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the independent watchdogs set up by government to regulate financial services in the UK and protect the rights of consumers. European firms (authorised by their home state regulator) that operate in the UK may also be covered.
The FSCS protects:
As a fund of last resort there are limits to what the FSCS can do, and to the amounts of compensation the Scheme can pay.
FSCS's protection is governed by the PRA and the FCA’s rules. These rules set out the protection FSCS can provide. The PRA’s rules cover claims in relation to deposits as well as life and general insurance policies and are set out in the Depositor Protection and Policyholder Protection parts of the PRA Rulebook. The FCA’s rules cover the remaining categories of claim. These are set out in the Compensation Sourcebook (the “COMP Rules”) in the Redress section of the FCA Handbook.
The FSCS does not cover the Channel Islands or The Isle of Man, although there are some exceptions to this for insurance claims.