Small businesses, ltd companies & charities
Your small business, limited company or charity will need to meet certain eligibility criteria to claim compensation with FSCS. We assess eligibility on a case-by-case basis and it varies for different types of claim. Legal status will affect eligibility, e.g., if you’re an individual or incorporated entity (such as a corporation or limited partnership). Charitable status is never relevant to eligibility.
We can only get involved if the firm your company/charity did business with has failed and can’t pay back your money itself. It must also have been authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) at the time the business was carried out.
A small business, limited company or charity may be the direct client of a failed firm but in some cases, e.g., if the company was acting as a bare trustee or agent/nominee company, we may be able to ‘look through’ the company to treat someone else as the claimant. We would then assess them, rather than the company, for eligibility.
If you want to find out if you’d be eligible for FSCS protection while the firm you’re doing business with is still trading (and hasn’t failed), the firm itself should be able to help. If it can’t, you could seek independent legal or financial advice.
We generally protect companies’ deposits, regardless of the size of the company. We assess eligibility under the PRA’s Depositor Protection Rules, in particular rule 2.2. Most types of regulated financial services company are not eligible though.
If a UK-authorised bank, building society or credit union fails, we'll automatically compensate each eligible company depositor up to £85,000.
I’ve got a small business account and a personal account with the same bank – are both accounts covered up to £85,000?
If your business is a separate legal entity, e.g., a limited company or LLP, you could claim up to £85,000 for each account. If you’re a sole trader (e.g., Mr Smith t/a Smith Motors) you wouldn’t be entitled to two separate claims – you could claim up to £85,000 in total. Although joint account holders are usually entitled to make separate deposit claims for £85,000 each, if the joint account holders hold the account as partners in a business, then the business partnership is only entitled to a single claim of £85,000 (not one claim per business partner).
We assess eligibility for insurance claims under the PRA’s Policyholder Protection Rules, in particular rules 7 and 8.
Generally, firms with an annual turnover of more than £1 million aren’t eligible for general insurance claims. The same goes for most types of authorised financial services firms.
For general contracts of insurance that are compulsory, usually all firms are eligible, regardless of size or authorisation status.
All firms are generally eligible for long-term insurance contract claims, regardless of size or authorisation status. Realistically, this may not occur very often in practice though, as companies don’t have pensions or annuities.
For investment claims, we use the FCA’s Compensation Sourcebook, in particular COMP 4, to assess if your firm is eligible to claim compensation with us.
Your firm must qualify as a ‘small company’ under section 382 of the Companies Act 2006 to be eligible. There are three criteria in the test - annual turnover, balance sheet and number of employees - and your firm must meet two of the three criteria to qualify as ‘small’.