Scheme Limitations

As a statutory fund of last resort there are limits to the protection FSCS can provide.

To qualify for compensation claimants need to be eligible under our rules. These form part of the FCA and PRA Handbook of rules and guidance, and can be found under Redress, Compensation. The rules tell us which types of claim are eligible for compensation, and limit how much compensation we are allowed to pay. We must abide by these rules at all times.

The main points are:

  • We can pay compensation only when an authorised firm is unable, or likely to be unable, to pay claims made against it. We describe this as being in default. We will carry out an investigation to establish the financial position of the firm.

  • We can pay compensation only if a claim is eligible under our rules.

  • FSCS can pay compensation only for financial loss and there are limits to the amounts of compensation we can pay.

  • The Scheme was set up mainly to assist private individuals, although smaller businesses are also covered.

  • Larger businesses are generally excluded, although there are some exceptions to this for deposit and insurance claims.

  • When FSCS is triggered

Important dates:

  • For investment claims, if a claim relates to business conducted before 28 August 1988 we are unlikely to be able to help. This is the date when these activities were first protected by an investor compensation scheme in the UK.
  • For mortgage advice and arranging, we will only be able to help if a claim relates to business conducted on or after 31 October 2004. These activities were not protected by FSCS before this date.
  • For claims relating to insurance intermediaries, we will only be able to help if a claim relates to business conducted on or after 14 January 2005. These activities were not protected by FSCS before this date. If a claim relates to travel insurance where the policy is sold alongside a holiday or other related travel we will only be able to help if the claim relates to business conducted on or after 1 January 2009.


FSCS can only consider claims against firms that were authorised by a UK regulator at the time the advice was given. The UK's regulators are the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). They replaced previous regulators, including:

  • FSA (Financial Services Authority)

  • PIA (Personal Investment Authority),

  • SIB (Securities and Investment Board),

  • FIMBRA (Financial Intermediaries, Managers and Brokers Regulatory Authority);

  • LAUTRO (Life Assurance and Unit Trust Regulatory Organisation);

  • SFA (Securities and Futures Authority)


Claims before 1 December 2001:

  • Slightly different rules apply for claims against an insurer or a bank that was insolvent before FSCS became operational (1 December 2001), or for claims against an investment firm that was declared in default before FSCS became operational. These claims are covered by the rules governing the separate compensation schemes that existed before that date, although we will handle the claim. FSCS became the single compensation scheme on 1 December 2001, replacing former schemes.

Jargon Buster

Authorised firm

a company, unincorporated body, partnership or individual permitted to carry out a regulated activity by the FCA or the PRA. This term includes a mutual (unincorporated) organisation, for example a friendly society.

Eligible

qualifying for compensation under Scheme rules.

FCA

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

FIMBRA

Financial Intermediaries, Managers and Brokers Regulatory Association (replaced by the PIA).

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.