Notes for editors
FSCS is the UK's statutory compensation scheme that protects customers of authorised financial services firms that carry out certain regulated activities. FSCS was set up by Parliament in 2001 and is funded by the financial services industry. FSCS protects deposits, investment business, home finance (mortgage) advice, general insurance, insurance broking and debt management. FSCS can pay compensation if the regulated firm owes a civil liability to a customer of an authorised firm, for example due to negligence, in connection with the regulated activity.
FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA), and does not charge individual consumers for using its services. Information about our current compensation limits is available here.
Declaring a firm in default
Before FSCS can pay compensation, it must be satisfied that a firm does not have sufficient assets to meet claims. It describes this as being ‘in default’. The Scheme will declare a firm in default if:
- it has received at least one claim; and
- it is satisfied that the financial services firm you did business with has failed and is unable to return your money itself (the company is ‘in default’).
FSCS is required to do this before it can pay compensation to eligible claimants.
Declaring a firm in default allows private individuals who have suffered actual financial loss as a result of their dealings with that firm to apply to the Scheme. Some businesses and charities may also be eligible, depending on the type of claim.
Dealing with a Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) authorised firm that is carrying out certain authorised activities gives consumers access to the Financial Ombudsman Service (FOS) and FSCS. Consumers can check that the firm they are dealing with is authorised by using the FCA’s Financial Services Register.
An ISDN line is available if you are interested in arranging a radio interview with an FSCS spokesperson. Please get in touch with our public relations team firstname.lastname@example.org to arrange a suitable time and date.