This sub-scheme covers claims made against failed deposit-taking firms, for example, banks, building societies and credit unions.
FSCS is triggered when a firm authorised to accept deposits by the Financial Conduct Authority or the Prudential Regulation Authority goes out of business, for example, if the firm goes into administration or liquidation, and is unable to repay its depositors. FSCS can also be involved if the PRA considers that an authorised firm is unable, or likely to be unable, to repay its depositors.
Once we are satisfied that a firm is unable, or likely to be unable, to pay claims against it, we declare the firm in default (this is the technical term for the firm failing). A declaration of default opens the way for the firm's customers to make a claim for compensation to us.
If a firm is in administration or liquidation we will work closely with the administrator or liquidator to verify eligible claims. With the failure of a small firm, where no liquidator or administrator is appointed, we will work with the firm's officials to obtain records, both paper and electronic, to enable us to deal with claims against the firm.