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What FSCS compensation covers
The Financial Services Compensation Scheme, or FSCS, protects UK consumers when an authorised financial firm fails. It is designed to compensate customers who have suffered losses because the firm cannot meet its obligations.
FSCS protection applies to specific regulated products and services. This can include bank deposits, insurance, pensions, investment advice and certain investments, but only where the rules and limits of the scheme are met.
Does it cover investment losses?
FSCS does not generally cover losses caused by normal market movements. If the value of your shares, funds or other investments falls because markets go down, that is usually an investment risk rather than a compensation issue.
However, FSCS may cover investment losses if they happened because an FCA-authorised firm gave unsuitable advice, mis-sold a product, or failed in a way that left you unable to recover your money. In those cases, the loss may be considered compensation-eligible.
When you may be eligible
You may be able to claim if a regulated financial adviser recommended an unsuitable investment, such as one that did not match your attitude to risk, financial goals or need for access to your money. Misleading information or a failure to explain the risks properly can also matter.
FSCS can also help if the firm holding your money has gone out of business and there is a shortfall. This is more common where assets, cash or transfer requests were not properly handled before the firm failed.
Limits and exclusions
FSCS compensation is subject to limits, and these depend on the type of product or claim. For investments, the maximum compensation is generally up to £85,000 per person, per firm, though different rules can apply in some situations.
The scheme will not pay for poor market performance, delays caused by your own decisions, or losses from unregulated investments. It also will not compensate if the product itself was high risk but correctly sold and fully explained.
What to do if you think you have a claim
Start by checking whether the firm was FCA-authorised at the time the advice or service was provided. You should also gather paperwork such as statements, suitability letters, contracts and any correspondence about the investment.
If the firm is still trading, you usually need to complain to the firm first. If it has failed, you can check your eligibility directly with FSCS and make a claim online.
Key takeaway
FSCS compensation does not cover every investment loss. It is mainly there to protect you when a regulated firm fails or when you were harmed by bad advice or mis-selling.
If your investments simply fell in value, FSCS is unlikely to help. If you believe the loss came from the firm’s wrongdoing or collapse, it is worth checking whether you can make a claim.
Frequently Asked Questions
FSCS compensation investment losses claim coverage refers to the potential protection offered by the Financial Services Compensation Scheme for certain losses linked to failed regulated financial firms and eligible investment business, subject to FSCS rules, limits, and eligibility criteria.
Eligibility for FSCS compensation investment losses claim coverage usually depends on whether you were a qualifying client of an eligible UK-authorised firm, whether the activity was covered by FSCS, and whether the firm has failed or is unable to return assets or money owed.
FSCS compensation investment losses claim coverage may apply to losses caused by firm failure, such as missing client money, unrecovered investments held by the firm, or unsuitable advice from an eligible authorised adviser, but it does not cover ordinary market losses.
FSCS compensation investment losses claim coverage does not usually protect against falls in market value, poor investment performance, or losses from products and activities outside FSCS scope, even if the investment itself lost money.
The amount payable under FSCS compensation investment losses claim coverage depends on the category of claim and the applicable FSCS compensation limits, which can differ between investment business, advice, deposits, and other financial activities.
If a covered investment firm fails, FSCS compensation investment losses claim coverage may compensate eligible customers for money or assets that cannot be returned, up to the relevant compensation limit and in line with the firm’s regulatory status.
FSCS compensation investment losses claim coverage can sometimes apply to pension-related investment losses if the loss arises from covered advice or administration by an eligible regulated firm, but the exact treatment depends on the circumstances of the claim.
FSCS compensation investment losses claim coverage may apply if you received unsuitable investment advice from a firm that was authorised and covered by FSCS, and the adviser’s failure caused a compensable loss under the scheme rules.
To make a claim for FSCS compensation investment losses claim coverage, you typically submit a claim through FSCS, provide details of the firm, the products or advice involved, and evidence of your losses or missing assets.
The time for an FSCS compensation investment losses claim coverage claim varies depending on the complexity of the case, the amount of evidence required, and whether the failed firm’s records are available, so some claims take weeks while others take months.
Evidence for FSCS compensation investment losses claim coverage may include account statements, contract notes, advice documents, correspondence with the firm, proof of payments, and any records showing the investment loss or missing assets.
Joint investors may be able to make separate claims under FSCS compensation investment losses claim coverage if each person is individually eligible and each has a covered financial loss, subject to FSCS rules and limits.
FSCS compensation investment losses claim coverage may apply to certain Self-Invested Personal Pension situations if the loss involves eligible advice, administration, or custody services provided by a covered firm, but it does not automatically cover all SIPP losses.
FSCS compensation investment losses claim coverage is usually designed for situations where a firm has failed or is unable to meet claims, although some complaints or claims may need to be handled through the firm, the Financial Ombudsman Service, or other routes first.
Overseas investors may be able to use FSCS compensation investment losses claim coverage if they meet the scheme’s eligibility requirements and were clients of a qualifying UK-authorised firm, but residency and client classification can affect entitlement.
Cash balances held with an investment firm may be covered under FSCS compensation investment losses claim coverage if they qualify as protected client money and the firm has failed, but the exact protection depends on how the money was held and recorded.
FSCS compensation investment losses claim coverage is a statutory compensation mechanism for eligible losses caused by covered firm failure or bad advice, while a normal investment complaint is a dispute with a firm that may be resolved by the firm or the Financial Ombudsman Service.
FSCS compensation investment losses claim coverage usually does not apply to standalone cryptocurrency investments unless the loss relates to a regulated, covered activity by an eligible firm; whether coverage exists depends on the exact product and firm involved.
If an FSCS compensation investment losses claim coverage claim is accepted, FSCS will normally calculate the eligible amount, apply any relevant limits, and arrange payment or another compensation outcome based on the case details.
You can check whether a firm qualifies for FSCS compensation investment losses claim coverage by confirming that it was authorised by the relevant regulator and by reviewing FSCS eligibility information for the firm, product, and type of loss involved.
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