Brexit and FSCS protection

The Financial Services Compensation Scheme (FSCS) provides compensation and protection to customers of authorised financial services firms that have failed.

FSCS protection for UK-based customers of UK authorised firms will not change as a result of the UK leaving the European Union (EU), regardless of whether the UK leaves the EU with or without a deal. This means that in the large majority of cases, existing FSCS protection will continue.

The UK is due to leave the EU on 29 March 2019. If the UK leaves the EU with a deal, there will be an implementation period from 29 March 2019 to the end of December 2020. During the implementation period, existing FSCS protections will not change as a result of EU Exit.

If the UK leaves the EU in March 2019 without a deal, there will be no implementation period. In this scenario, FSCS protection may change if a customer and/or their firm is based in the European Economic Area (EEA). The EEA includes EU countries and also Iceland, Liechtenstein and Norway.

For information about FSCS protection for your financial services product, please contact your firm directly.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set the rules and scope of FSCS protection. The PRA and FCA have published the near-final rules that would that would apply in relation to the FSCS in a no-deal scenario.  Subject to approval by HM Treasury, final rules would be made on 28 March 2019 if a withdrawal agreement had not been ratified.  The following questions and answers are therefore based on the near-final rules. 

 

FSCS protection for Deposits

FSCS protection for deposits will depend on a number of factors including where the firm is authorised and in which jurisdiction the firm holds your deposits. Check with your firm for more information.

I use a UK bank/building society/credit union in the UK. Will FSCS protect my money after Brexit on 29 March 2019?

Yes. Eligible deposits held by UK authorised banks, building societies and credit unions in the UK will be protected by the FSCS after the UK’s exit from the EU (assuming the firm continues to be UK authorised). FSCS protection is not dependent upon the depositor’s place of residence, but where the bank, building society or credit union holds the deposit. If a deposit is held by a branch in the UK, FSCS protection applies (unless it is a branch of a Gibraltarian-based firm, in which case, protection would be the responsibility of the deposit guarantee scheme in Gibraltar).

Your bank, building society and credit union are obligated to provide you with an annual information sheet that describes your depositor protection. Check with your firm for more information.

 

I am in the UK and bank with an UK branch of an EEA firm. Will I still be protected after Brexit?

If the UK leaves the EU in March 2019 without a deal, UK branches of EEA authorised deposit-taking firms (e.g. an EEA bank) will become UK authorised and members of the FSCS. If these firms hold their customers’ deposits in the UK, eligible deposits will be FSCS protected up to £85,000.

Deposits held in UK branches of Gibraltarian-based firms are treated differently and depositor protection will remain the responsibility of the Gibraltar deposit guarantee scheme.

 

I am living in the EEA and bank with an EEA firm. Will I still be protected after Brexit?

Depositors who bank with EEA-authorised firms in the EEA should not see their deposit protection change – they should currently be covered by an EEA deposit guarantee scheme, which will continue after Brexit.

Please contact your firm for more information or visit www.efdi.eu/full-members for a full list of EEA deposit protection schemes.

 

I’m in the EEA and bank with an EEA branch of a UK firm and am currently protected by the FSCS. Will I still be protected after Brexit?

If the UK leaves the EU in March 2019 without a deal, deposit protection previously provided by the FSCS for deposits held in EEA branches of UK firms will cease. However, you should be protected by an EEA deposit guarantee scheme instead, but this will depend upon rules in each EEA jurisdiction. Any change in, or loss of, protection should be notified to customers by firms.

Eligible deposits held in Gibraltarian branches of UK firms are treated differently and will continue to be protected by the FSCS after Brexit.

Please contact your firm for more information or visit www.efdi.eu/full-members for a full list of EEA deposit protection schemes.

 

Will the FSCS deposit protection limit of £85,000 be affected by or revised after Brexit?

There are no plans to revise the FSCS deposit protection limit because of Brexit.

 

FSCS protection for Investments

I’m based in the UK and I’m a customer of an EEA authorised investment firm here in the UK (i.e. an inbound passported-in EEA investment firm), will I continue to be protected after Brexit?

Yes. UK based customers of EEA-authorised investment firms operating in the UK are currently protected by EEA schemes. FSCS protection will be extended to customers of these firms for a limited period through a Temporary Permissions Regime if the firm has a branch in the UK or was covered by the FSCS prior to Brexit. This is to provide certainty to UK customers.

FSCS protection for Insurance Policies

FSCS protection for insurance policies following Brexit will depend on a number of factors, including whether your insurer remains authorised in the UK, the location through which the policy was issued, the location of the risk you’ve insured, and whether the policy was issued before or after Brexit.  Check with your firm for more information.

 

My insurance policy was issued by a UK insurer prior to Brexit, am I still FSCS-protected?

If your insurance policy was FSCS-protected prior to Brexit, it will remain FSCS-protected after Brexit, as long as your insurer remains a UK authorised insurer. 

Some insurers have transferred their EEA-related business to non-UK authorised insurers to enable the policies to continue to be serviced after the UK leaves the EU. In that case, FSCS protection will only be available for insured events that occurred prior to the transfer.

Please contact your insurer for any questions relating to FSCS coverage for your insurance policy. 

 

My insurance policy was issued by an EEA insurer prior to Brexit, am I still FSCS-protected?

If your insurance policy was FSCS-protected prior to Brexit, that policy will generally remain FSCS-protected after Brexit as long as the policy remains in place (and is not reissued) and as long as the insurer remains a ‘relevant person’ in the UK. 

Transitional arrangements have been introduced so that after Brexit, most EEA insurers who insured UK risks prior to Brexit will remain ‘relevant persons’ at least temporarily, allowing time for other arrangements to be made if necessary.  Please check with your insurer for further details of their position.

 

My insurance policy is issued by a UK/EEA insurer after Brexit, am I still FSCS-protected?

Depending upon the location of the insurer’s branch through which the policy is issued and the type of UK authorisation status held by the insurer, policies issued after Brexit in respect of risks in the UK, Channel Islands, Isle of Man and Gibraltar may be eligible for FSCS protection.  For example, if issued through a UK branch, an eligible policy in respect of risks in the UK, Channel Islands, Isle of Man and Gibraltar will be FSCS protected, as before. 

An insurance policy issued after Brexit in respect of EEA risks will not be FSCS-protected, regardless of the location of the firm’s branch through which the policy is issued. 

If an EEA insurer that is using the transitional arrangements after Brexit to set up a UK branch issues a policy through an EEA branch, only UK risks can be FSCS-protected.

Please contact your provider for any questions relating to FSCS coverage for your insurance policy. 

 

How is reissue or renewal of an insurance policy treated?

Reissue or renewal of an insurance policy (e.g. an annual renewal) will count as a new issue.  If this occurs after Brexit, then the approach in question 3 (above) for issue after Brexit will generally apply.

What will amount to a ‘reissue’ will depend on the terms of the policy and the facts in each case, but minor and/or administrative changes to a policy generally will not count as a reissue.

 

How do I know if my insurance policy was FSCS-protected prior to Brexit?

FSCS is only able to consider the eligibility of specific insurance policies in the event of an actual insurer default.  There are a number of eligibility criteria to be met. If you’re unsure whether your insurance policy was protected pre-Brexit, please check with your insurer.  You may also wish to seek independent financial/legal advice.

 

Where FSCS-protection applies to an insurance policy, how much am I covered for?

For more information on FSCS’s insurance protection, including applicable limits, see https://www.fscs.org.uk/what-we-cover/insurance/.

 

Where can I find more information about the UK’s transitional arrangements for EEA insurers that apply after Brexit?

For more information on the transitional arrangements for EEA insurers see PS5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’.

 

Information for firms

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set the rules and scope of FSCS protection and have been consulting on what Brexit means for FSCS protection in the event that the UK leaves the EU without a deal.

On 28 February 2019, the PRA and FCA published policy statements and the near-final rules. Further information can be found at:

https://www.fca.org.uk/publications/policy-statements/ps19-5-brexit-policy-statement

https://www.bankofengland.co.uk/paper/2019/the-boes-amendments-to-financial-services-legislation-under-the-eu-withdrawal-act-2018

https://www.bankofengland.co.uk/prudential-regulation/authorisations/financial-services-compensation-scheme