Further Details on the FSCS

What is the FSCS?

The Financial Services Compensation Scheme (FSCS) is the UK's statutory fund of last resort for customers of authorised financial services firms. We can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. In general this is when a firm has stopped trading, and has insufficient assets to meet claims, or is in insolvency. We do not charge individual consumers for using our service.

FSCS is an independent body set up by law. It was created under the Financial Services and Markets Act 2000 (FSMA) and became the single compensation scheme on 1 December 2001 when FSMA came into force, replacing former schemes. FSCS is funded by levies on authorised firms.

What we cover

The FSCS covers business conducted by firms authorised by the Financial Conduct Authority (FCA), the independent watchdog 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:

  • deposits,

  • insurance policies,

  • insurance broking (for business on or after 14 January 2005), including connected travel insurance where the policy is sold alongside a holiday or other related travel (e.g. by travel firms and holiday providers) (for business on or after 1 January 2009);

  • investment business, and

  • home finance (for business on or after 31 October 2004).

There are limits to the protection available

As a fund of last resort there are limits to what FSCS can do, and to the amounts of compensation the Scheme can pay. Our rules set out the protection FSCS can provide. These form part of the FCA Handbook of rules and guidance, and can be found under Redress, Compensation.

Other topics in this section:


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Deposits

money placed in a bank or similar institution to earn interest or for safe-keeping.

FCA

The Financial Conduct Authority is the UK's regulator for the financial services industry. 

FSA

Financial Services Authority, was previously the UK's regulator for the finance industry. It was replaced by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) on 1 April 2013.

FSMA

Financial Services and Markets Act 2000, an Act of Parliament governing the regulation and provision of financial products, product providers and financial advisers.

Insolvency

having insufficient assets to meet due debts or liabilities.