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What is FSCS compensation?
The Financial Services Compensation Scheme, or FSCS, is the UK’s statutory compensation fund for eligible customers of authorised financial firms. It can step in when a regulated firm fails and is unable to pay claims itself.
FSCS compensation is designed to protect consumers, and in some cases small businesses, from losing money because of firm failure. It is not the same as a general claim for compensation, and the amount paid depends on the type of product or service involved.
How much can FSCS pay?
The amount FSCS can pay varies depending on the financial product. For most deposits, such as money held in bank or building society accounts, FSCS can pay up to £85,000 per person, per authorised institution.
For insurance claims, compensation is usually paid at 100% for compulsory insurance, and at 90% for other insurance products, subject to the relevant policy terms. For investment claims, FSCS can usually pay up to £85,000 per person, per firm.
For home finance products, including mortgage advice and arranging, the limit is generally £85,000 per claim. For pension advice, the limit is also typically £85,000 per person, per firm.
What affects the amount you may receive?
FSCS does not pay compensation for every loss in full. The amount you receive depends on the type of financial product, the circumstances of the failure, and whether your claim is eligible under FSCS rules.
If you have money with more than one authorised firm, you may be protected separately up to the applicable limit for each firm. If joint accounts are involved, the limit is usually applied to each account holder individually.
In some cases, compensation may be reduced if part of the loss is not covered by FSCS protection. This can happen where the product was not regulated, the claim falls outside the scheme rules, or the losses exceed the compensation cap.
How FSCS works in practice
You do not usually need to pay to make an FSCS claim. If the firm has failed, FSCS will assess whether your claim is valid and how much compensation is due under its rules.
Payments may be made directly to you or used to transfer your protection to another provider, depending on the product. The process can take time, especially where the firm’s records need to be checked.
If you think you may be eligible, it is important to gather your account details, statements, and any documents relating to the firm. This helps FSCS assess your claim and calculate the correct amount.
Key points to remember
FSCS compensation limits are set by product type, and the headline limit is often £85,000 per person, per firm. However, some products are covered differently, so it is worth checking the exact rules for your situation.
If your loss is larger than the FSCS limit, you may not recover the full amount through the scheme. Understanding the relevant protection level can help you know what to expect before you submit a claim.
Frequently Asked Questions
The FSCS compensation claim payment limit is the maximum amount the Financial Services Compensation Scheme can pay to an eligible claimant for a protected financial firm failure, subject to the relevant protection category and rules in force at the time of the claim.
For eligible bank, building society, and credit union deposits, the FSCS compensation claim payment limit is generally up to £85,000 per person, per authorised institution, with some temporary high balance protections applying in limited circumstances.
For eligible investment claims, the FSCS compensation claim payment limit is generally up to £85,000 per person, per firm, if the firm is unable to meet its obligations and the claim is covered by FSCS protection.
For eligible insurance claims, the FSCS compensation claim payment limit depends on the type of policy and claim, and compensation may cover 100% of eligible claims in some cases or a proportion of the claim in others.
For eligible pension advice claims, the FSCS compensation claim payment limit is generally up to £85,000 per person, per firm, where the claim arises from regulated advice covered by FSCS rules.
The FSCS compensation claim payment limit usually applies per person, per authorised firm, not per individual account, although the exact treatment can vary by protection type and ownership structure.
Yes, the FSCS compensation claim payment limit can apply separately to each account holder on a joint account, so each person may be protected up to the relevant limit for that institution.
If you hold multiple eligible accounts with the same bank or banking group, the FSCS compensation claim payment limit is usually combined across those accounts and compared against the relevant limit for that institution.
The FSCS compensation claim payment limit is applied separately to each authorised institution, so savings held with different banks may each be protected up to the relevant limit, provided the firms are separately authorised.
If your eligible losses exceed the FSCS compensation claim payment limit, FSCS may pay only up to the limit, and any remaining amount would usually become an unsecured claim against the failed firm or its insolvency estate.
Yes, interest can count toward the total amount considered under the FSCS compensation claim payment limit, so the compensation calculation may include both your principal balance and any eligible interest.
Eligible foreign currency deposits may be covered by the FSCS compensation claim payment limit, but compensation is typically calculated in sterling using the relevant exchange rate at the time of default or claim assessment.
Temporary high balances may receive additional protection above the standard FSCS compensation claim payment limit in certain qualifying situations, such as proceeds from a property sale, inheritance, or insurance payout, for a limited period.
Yes, the FSCS compensation claim payment limit can change if the government or regulator updates the rules, so the applicable limit is the one in force when the relevant firm fails or the claim arises.
You can check whether the FSCS compensation claim payment limit applies by confirming that the firm was authorised and covered by FSCS protection for the product or service you used.
To support an FSCS compensation claim payment limit claim, you may need account statements, policy documents, statements of advice, proof of ownership, and any correspondence showing the amount lost and the firm involved.
Payment timing under the FSCS compensation claim payment limit varies by case, but simple deposit claims may be paid relatively quickly, while more complex investment or insurance claims can take longer to assess.
In many cases, FSCS compensation claim payment limit payments are handled automatically when the firm fails and customer records are available, but some claims require you to submit information or a formal claim.
The FSCS compensation claim payment limit can cover eligible business deposits and certain other protected products, but the rules depend on the type of business, the product, and the authorisation status of the firm.
You can check the current FSCS compensation claim payment limit on the official FSCS website, which publishes up-to-date limits, eligibility rules, and guidance for different types of financial products.
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