How does the Financial Services Compensation Scheme work?
The Financial Services Compensation Scheme (FSCS) provides compensation and protection to customers of authorised financial services firms that have failed.
How much of my deposits will be protected?
Under the FSCS, up to £85,000 per eligible person and £170,000 for joint account holders, will be protected.
You get protection for up to £85,000 (per person) for each institution you make a deposit with. For example, if you deposit £100,000 at a single bank and it later collapses, you would only receive £85,000 in compensation from the FSCS. Due to this reason, it is advisable to split the deposit and hold up to £85,000 in one bank and the remainder with another provider with FSCS protection.
Investments of up to £50,000 are also covered by the FSCS. However this only applies if a provider fails and cannot return your money, not if you’ve lost money on your investments.
Note that some products are not covered by the FCSC – the provider should tell you if this is the case.
Will I still be protected by the FSCS following Brexit?
FSCS protection for UK-based customers of UK authorised firms has not changed as a result of the UK leaving the European Union (EU). This means that in most cases, existing FSCS protection will continue as normal.
However, FSCS protection may change if a customer and/or their firm is based in the European Economic Area (EEA). The EEA includes EU countries and also Iceland, Liechtenstein and Norway.
Did you know?
FSCS protects temporary high balances in your bank account, building society account or credit union account of up to £1million for 6 months. The protection begins from the date the temporary high balance is credited to an individual depositor’s account, or to a client’s account on an individual’s behalf.
If you would like to speak to us about ways to maximise the protection offered by the Financial Services Compensation Scheme, please get in touch with a member of our team.