What is the Financial Services Compensation Scheme?

Financial Services Compensation SchemeThe FSCS is the UK's compensation fund of last resort for customers of authorised financial services firms. We may pay compensation if a firm is unable, or likely to be unable, to pay claims against it. This is usually because it has stopped trading or has been declared in default.

Impartial and independent

The FSCS are independent of the government and the financial industry, and were set up under the Financial Services and Markets Act 2000, becoming operational on 1 December 2001 (although we still cover claims from before this date). They do not charge individual consumers for using their service.

What they cover

The FSCS covers business conducted by firms authorised by the Financial Conduct Authority (FCA), the independent watchdog set up by government to regulate financial services in the UK and protect the rights of consumers. European firms (authorised by their home state regulator) that operate in the UK may also be covered.

The FSCS protects:

  • deposits,
  • insurance policies,
  • insurance broking (for business on or after 14 January 2005),
  • including connected travel insurance where the policy is sold alongside a holiday or other related travel (e.g. by travel firms and holiday providers) (for business on or after 1 January 2009);
  • investment business, and
  • home finance (for business on or after 31 October 2004).

There are limits to the protection available

As a fund of last resort there are limits to what the FSCS can do, and to the amounts of compensation the Scheme can pay. Our rules set out the protection FSCS can provide. These form part of the FCA Handbook of rules and guidance, and can be found under Redress, Compensation. The FSCS does not cover the Channel Islands or The Isle of Man.

More Information

For more information about the FSCS and to see whether you are covered, please click here.

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