3. Q & As for Investment Firms

3.1. How does the FSCS decide whether it can help me with an investment claim?

To qualify for compensation you must be eligible under the FSCS rules which are made by the FCA and the PRA, the independent watchdogs set up by government under the Financial Services and Markets Act 2000 (FSMA) to regulate financial services in the UK and protect the rights of consumers. The rules tell the FSCS which types of claim are eligible for compensation, and limit how much compensation they are allowed to pay.

For an investment claim to be eligible to receive compensation from the FSCS, it must meet ALL of the following criteria:

  • the arrangement of or advice you received to buy the investment must have been given on or after 28 August 1988; and
  • the firm you dealt with must have been authorised by the appropriate regulator to do so at that time; and
  • you must have lost money as a result of the advice you were given or other services you received; and
  • the firm (or its principals) no longer has sufficient assets to meet claims for compensation.

3.2. How long would it take to process a claim?

After a firm has been declared in default, FSCS will aim to process your claim within six months of receiving your application form. Any delays may be caused by factors outside their control, or because the claim is particularly complicated. For example, they may have difficulty getting hold of important files from third parties; they may be waiting for information from a liquidator; or they may have many claims arising from a particular default which will take time to process.

You should inform FSCS if you are facing immediate financial hardship and they will try to deal with your claim as a priority.

3.3. Are investments held by nominee companies covered?

Authorised investment firms such as stockbrokers may arrange for your shares to be registered in the name of a nominee company. They can do this only if you agree in writing.

Nominee companies are covered by the FSCS if they are authorised or if an authorised investment firm has accepted responsibility for their losses.

If the nominee company is not separately authorised consumers should check whether the investment firm has accepted responsibility to ensure they are covered by the FSCS. If a nominee company is not authorised and the adviser has not legally accepted responsibility for its actions, the investors will not be covered by the FSCS if the nominee causes them any loss.

You can check whether a firm is regulated by using the financial services register or by phoning the FCA Consumer Helpline on 0300 500 8082.

3.4. Does FSCS cover investments made through solicitors and other professionals?

The Law Society has its own compensation scheme for its members' investment business, so claims against solicitors in England and Wales should be referred to it. Claims against solicitors in Scotland should be referred to The Law Society of Scotland.

Claims against some other professionals can be made to FSCS, but only if the claim arose on or after 1 December 2001. If your claim is for activities before this date, please look at FSCS’s ‘Claiming compensation’ booklet for details of the organisations to contact.


The FCA

The Financial Conduct Authority website includes a searchable database of all firms authorised and regulated by the FCA and the Prudential Regulation Authority (PRA).

The FOS

The Financial Ombudsman Service is the official independent expert in settling complaints between consumers and financial businesses

Jargon Buster

  • Eligible

    qualifying for compensation under Scheme rules.
  • FCA

    The Financial Conduct Authority is the UK's regulator for the financial services industry. 

  • FSA

    Financial Services Authority, was previously the UK's regulator for the finance industry. It was replaced by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) on 1 April 2013.
  • FSMA

    Financial Services and Markets Act 2000, an Act of Parliament governing the regulation and provision of financial products, product providers and financial advisers.
  • In default

    A firm unable, or likely to be unable to pay claims against it. This will generally be because it has stopped trading and has insufficient assets to meet claims, or is in insolvency.