FSCS

The Financial Services Compensation Scheme is the UK’s statutory fund of last resort for customers of firms authorised by the UK financial regulators. It was set up under the Financial Services and Markets Act 2000 and is funded by levies on the financial industry rather than by taxpayers. It covers several areas, each with its own limit: bank and building society deposits, investments, insurance, pensions and some mortgage advice. For investments, it can pay out when an authorised firm has failed and cannot return client assets, or when a failed firm owes compensation for bad advice or poor management of your money.

The FSCS does not protect against investments falling in value, and it helps only when the firm itself has failed. Limits apply per person per firm and are reviewed from time to time, so the current figures should be checked on the scheme’s own website, which also explains which products and firms are covered. Some things fall outside its scope, such as most crypto assets and firms not authorised in the UK. Elsewhere in Europe, national deposit guarantee and investor compensation schemes play a similar role; in the US, bank deposits are protected by the FDIC and brokerage accounts by SIPC.