Questions and Answers
What is the Financial Services Compensation Scheme (FSCS)?
The FSCS is the UK's statutory fund of last resort for customers of financial services firms. This means that FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it. The FSCS is an independent body, set up under the Financial Services & Markets Act 2000 (FSMA). We do not charge individual consumers for using our service.
Where does FSCS fit in?
The FSCS deals with claims against authorised firms (those regulated by the Financial Conduct Authority or the Prudential Regulation Authority) 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. We describe this as being in default.
The Financial Ombudsman Service deals with complaints against authorised firms that are still trading.
How can I find out if a firm is a 'member' of the FSCS?
You can find out whether a firm is authorised by using the FCA's Firm Check Service on its consumer website. You can also find out about the status of a firm by telephoning the FCA's Consumer Helpline on 0800 111 6768. They will be able to tell you if the firm is still authorised to trade, and how to get in touch with it.
What if I have a complaint against a firm that is still trading?
You should complain directly to it. If your complaint is not resolved, you should contact the Financial Ombudsman Service.
How do you decide whether you can help me?
To qualify for compensation you must be eligible under our rules which are made by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), the independent watchdogs set up by government under FSMA to regulate financial services in the UK and protect the rights of consumers. The rules tell us which types of claim are eligible for compensation, and limit how much compensation we are allowed to pay. Different rules and limits apply to different types of claim.
Do I have to pay anything to have my claim considered by the FSCS?
No. The FSCS is a non-profit, independent organisation set up under FSMA. We do not charge individual consumers for using our service.
How long will it take?
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 level of information we need to gather from other sources. Some of these factors may be entirely outside our control, but we are still able to provide general guidelines for each claim type.
Why is there a limit to the compensation available from the FSCS?
Our rules tell us which types of claim are eligible for compensation and limit how much compensation we are allowed to pay. There are limits to the protection FSCS can provide. (See also Question 5).
To be eligible for compensation you must have lost money because of your dealings with a regulated financial services firm. The FSCS can pay compensation only for financial loss. For example, for investment claims the compensation we pay would try to take account of the financial position you would have been in had you not invested.
Does compensation cover any guarantees I was given?
The fact that the return on your investment or policy was described as 'guaranteed' does not necessarily mean that we can pay you compensation equal to the return you were promised. The FSCS can pay compensation only for financial loss. For example, for investment claims the aim of compensation is generally to put you back in the position you would have been in had you not invested.
What happens if the firm I am claiming against was insolvent or declared in default before the FSCS took over responsibility for compensation (1 December 2001)?
The rules and compensation limits of the pre-existing schemes will apply, although the FSCS will handle the claim. Compensation limits and eligibility rules may differ.
The firm I dealt with is no longer trading, but the FSCS says it cannot help me. Why?
As a fund of last resort, we can only consider claims if they cannot be paid by anyone else. If the firm is no longer trading but still has assets that could meet your claim, we are unlikely to be able to help you. This means that you will need to take your case up with the firm you dealt with.
If you are having problems finding the firm or its owners and wish to pursue your claim, we may be able to provide contact details. Please contact us.
If the firm (or its owners) will not consider your claim, you could take legal advice or contact your local Citizens Advice Bureau for help.
The Financial Ombudsman Service (FOS) may be able to help you make your claim in some circumstances.
Are charities eligible for protection under the FSCS?
Charities are covered by the scheme to the same extent as other organisations and individuals. However a number of important exceptions apply and generally it is smaller charities that will be eligible.
The COMP Rules, which set out who is eligible to benefit from the protection provided by the FSCS, do not specifically mention charities. Instead the rules set out the exceptions that will apply, and those most likely to include charities are:
- a body corporate (which includes a company, industrial and provident society, Royal Charter body, and statutory corporation) which has two or more of the following
- more than £6.5 million turnover
- more than £3.26 million balance sheet total
- more than 50 employees
- an unincorporated association which has assets of more than £1.4 million;
- collective investment funds (these would include common investment funds).
If your charity meets any of the above criteria it will not be eligible for compensation.
If you are a charity and unsure of your eligibility, please contact us on 0800 678 1100 or 020 7741 4100. Your auditor or professional advisor may also be able to advise. Further information on the FSCS and what it means for charities can be found on the Charity Commission website.