Financial Services Compensation Scheme

The Financial Services Compensation Scheme can pay out money as compensation to people who end up out of pocket because a bank or other financial services provider goes bust. It also helps people who lose money because of poor advice from a financial adviser who has since gone out of business. Find out what it covers and when you can claim.

What the Financial Services Compensation Scheme covers

The scheme covers several different kinds of financial services. You could get compensation if:

  • You have lost money in accounts with a bank, building society or credit union
  • Your insurance company goes bust – the Financial Services Compensation Scheme can pay protected claims and try to arrange for, or help with, the transfer of the insurance business to another company if this is cost effective and practical
  • Your pension provider goes bust – however the scheme only covers pensions regulated by the Financial Conduct Authority – you can see an overview of which schemes are and aren’t covered on The Pensions Advisory Service website
  • You lost money because you got poor financial advice for example on mortgages, insurance or investments, from a firm that has now gone out of business
  • You lost money because your financial services provider negligently managed your investments or committed fraud

What the scheme won’t cover you for

You are not covered by the scheme if:

  • The company responsible is still in business – you must complain to them first, and then take your case to the Financial Ombudsman if you are not satisfied
  • The firm wasn’t responsible for your loss – for example, if your loss was caused by an investment not performing as well as you hoped
  • The company was not authorised by the Financial Conduct Authority (FCA)
  • The company was based in the European Economic Area (EEA) and has chosen not to join the FSCS (all financial firms with headquarters in the EEA must sign up to their home country’s compensation scheme, and may have to join the FSCS, depending on how they are regulated by the FCA
  • Your claim relates to business that took place before a certain date – this date varies depending on the type of claim – you can check key dates on the Scheme’s website here

The Financial Services Compensation Scheme can cover individual customers and small businesses, but generally does not cover losses incurred by larger companies.

If you think you might have a claim because you have lost money and the firm has gone bust, read the section ‘Where to get more information’ below.

If you think you’ve been sold a product that wasn’t suitable for you – mis-selling – you might be able to claim compensation.

How much compensation can you get?

This depends on a number of things.

  • You will only get compensation for money that you have lost
  • There are limits on what will be paid out for each type of product. For example, there are different limits for bank accounts, insurance and investments
  • The amount you can claim depends on when the company went bust – technically, the date it was declared in default

Where to get more information

Find out more by following the links below.

The rules on claiming compensation if your insurance or pensions provider goes bust are complex so it’s best to contact the Financial Services Compensation Scheme directly to find out how you may be covered.

This article is provided by the Money Advice Service.

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