Deposit protection Q&As - credit unions

What is the Financial Services Compensation Scheme (FSCS)?

FSCS can pay compensation to customers of authorised financial services firms when they fail. Set up by parliament and funded by the financial services industry, FSCS is a completely independent and free service. This means FSCS can pay back any money you hold with a failed credit union, up to its compensation limit of £85,000 per person.

What do I need to do to get my money back if my credit union fails?

You don’t need to do anything. FSCS will automatically pay back your money using the account information it receives from your credit union. 

How soon will I get my money back if my credit union fails?

In most cases, FSCS will return your money within seven days from the date your credit union failed. For more complex cases which may need further investigation, FSCS aims to pay claims within 15 working days.

How will FSCS pay back my money if my credit union fails?

If you have a balance of less than £1,000, FSCS will send you a letter to get cash over the counter at the Post Office.  If you have a balance of more than £1,000, FSCS will send you a cheque.

I’m an individual account holder. Am I protected?

Yes. FSCS protects up to £85,000 in total across all accounts you hold with the credit union.

We are joint account holders. Are we protected?

Yes. FSCS protects each of you (any number of account holders) up to £85,000 in total across all accounts you hold with the credit union.

I’ve got a small business account and a personal account with the credit union – 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 the company and up to £85,000 for your personal 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.  As an exception, business partnerships can make two separate claims (but only one claim, not one claim per partner).

Most businesses are protected but authorised financial services firms are not. See a full list of who isn’t protected in the Prudential Regulation Authority’s Rulebook.

There is no size test.

I have several businesses each with their own account in the credit union.  Are they protected?

If each business is a separate legal entity, then FSCS would protect each one up to £85,000. 

Branches of the same legal entity are considered to be the same business, so FSCS can protect up to £85,000 in total across all these accounts within the same credit union.

Most businesses are protected but authorised financial services firms are not. See a full list of who isn’t protected in the Prudential Regulation Authority’s Rulebook.

There is no size test.

How does FSCS protect my child’s account?

If the account is an individual account held in the child’s name, FSCS protects up to £85,000 in total across all accounts they hold, either in their name or where they are listed as the beneficial owner (e.g., money held on their behalf under a trust arrangement).

If the money is held in a child trust fund or junior ISA account, the compensation will have to be paid into another ISA rather than being cashed.

See our compensation limits for credit unions