The Financial Services Compensation Scheme (FSCS)

The Financial Services Compensation Scheme (FSCS) compensates you when financial companies leave business. The FSCS also covers you if your financial advisor gives you misleading advice and has since gone bust. The service is free and independent and was set up by the government. If you have a claim, go directly to their website, and they will tell you if you are eligible for a claim. You can contact them by email, phone, post or online chat. Claiming with the FSCS means you will get 100% of any compensation that you are entitled to.

The FSCS covers a vast range of financial products, such as:

• Pensions
• Investments
• Bank accounts
• Mortgages
• Insurance

 

Pensions

The FSCS can also compensate if your pension provider goes out of business.

The FSCS will pay 100% compensation if the pension fails with no upper limit. However, if a SIPP provider fails, it is capped at £85,000 per person per firm.

You can claim up to £85,000 compensation per person if you have been given bad advice.

Deposits

If you have money in a bank that has just failed. The FSCS aims to protect your deposit to a certain amount. Normally, you are recompensated within 7 days of bank failure.

You can claim compensation of £85,000 per person and £170,000 on joint accounts. 

Investments 

The FSCS protects certain investments, such as stocks, shares, or funds. If the firm holding your assets becomes insolvent. You may be eligible for compensation up to a specified limit.

If a firm fails after 1 April 2019, you can claim compensation. You may get up to £85,000 per eligible person per firm.

Home Finance 

The FSCS can also compensate if your mortgage provider leaves the business.

If a firm fails after 1 April 2019, you can claim compensation. You may get up to £85,000 per eligible person per firm.

Insurance

The FSCS can compensate if your insurer becomes insolvent and can't meet its obligations. This is subject to certain conditions, limits and requirements

 The key criterion is that the company must be regulated by the PRA. The Prudential Regulation Authority is the regulatory body for insurance companies.

This ensures that policyholders are covered in such circumstances.

Your legal rights and FSCS compensation

When you have a successful claim with the FSCS, they will get the most they can, depending on the limit. However, if you accept compensation, you give the FSCS your legal rights. Meaning that you forfeit your ability to pursue a claim against the firm or other parties about the issue.

You need to fully understand the effects of accepting compensation. Especially if there is additional legal action.

Using a financial advisor

A financial advisor helps you spread wealth to providers to maximise FSCS coverage. 

At Regulated Advice, we can connect you with a financial advisor.