How FSCS protects your money

Always check that the financial services firm you are dealing with is authorised

There are four main ways to check that a firm is authorised:

Check the documents the firm gave you – they often show a Firm Reference Number (FRN) or authorisation number.
Check the firm’s website – the FRN or authorisation number is often in the ‘legal information’ section.
Call the firm and ask for their FRN or authorisation number (which is
supplied to them by the FCA or PRA).
Use the Financial Services Register at www.fca.org.uk/register, which has details of every financial services firm authorised to do business in the UK.

What sort of firms does FSCS cover?

We only cover financial services firms that have been authorised by

the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) to do business in the UK. That’s why you should always check that the firm has an FCA or PRA authorisation number, sometimes referred

to as a Firm Reference Number (FRN).

The sections on the following pages explain what each type of business includes, and the compensation limits.

What products does FSCS cover?

We cover seven different types of business:

Deposits, such as money held in bank accounts including cash ISAs
Insurance policies, such as motor and home, or life insurance and pension plans
Insurance broking, including advice about insurance policies
Investment business, including financial advice or investment products such as collective investment schemes
Arranging and advice about home finance, such as mortgages
Debt management, under certain criteria
Funeral plans, including advice to take out a funeral plan or the way a funeral plan was set up (funeral plan intermediation).

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Deposits
Compensation limit
We protect up to £85,000 per person or company, per authorised firm.
FSCS protects your deposits, whether you’re an individual or a company. A deposit is money in accounts such as current and savings accounts, including cash ISAs. If your bank, building society or credit union that is authorised to do business in the UK fails, we may be able to pay compensation.

There are two important points to remember about the deposit compensation limit.
1. The limit applies to individuals and companies, not accounts. This means that for joint accounts the limit applies to each named account holder. So, for example, if you have a joint account with your spouse or partner, and no other accounts of your own with that firm, you will each receive up to £85,000 under the deposit limit. So FSCS would protect up to £170,000 of savings in a joint account.
2. The limit applies per authorised firm. This is important because sometimes a firm operates more than one brand under the same FRN or authorisation number. This
  means individuals with accounts held under
  
  different brands with a firm operating under one FRN or authorisation number will only be entitled to a total of £85,000, regardless of the number of accounts held.
  You should therefore check:
  1. whether you hold deposits with a bank or building society that shares an FRN
    or authorisation number with another brand of that firm, and
  2. whether your total deposits with all those brands are more than £85,000.
  Example
  If you have a current account with “Bank X” and savings with “Bank Y” and they share one FRN or authorisation number, they are classed as a single firm for the purposes of compensation. This means your limit for compensation is
  Current account with Bank X
  Savings account with Bank Y
  Share one authorisation; classed as a single ﬁrm
  Firm Reference Number (FRN): 123456
  £85,000 compensation limit
  £85,000 in total, shared across “Bank X” and “Bank Y”.
  
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  How to find out if your bank or building society is part of a larger banking group
  Your bank or building society should provide this information to you
  at least annually on your printed statement or electronically. There are three other ways to check:
  1. Ask your bank or building society whether it trades under different brands with a single Firm Reference Number (FRN) or authorisation number.
  2. Visit FSCS’s website to check whether the bank or building society brands you have money with share a banking authorisation and whether all your savings
    are protected: www.fscs.org.uk/ protected.
  3. Use the Financial Services Register at www.fca.org.uk/register to
  look up your banks’ and building societies’ FRN or authorisation numbers. If any numbers are the same, they share a banking
  authorisation so one limit applies.
  Temporary high balances
  FSCS also protects certain types of deposits above £85,000 held by individuals. We protect certain “temporary high balances” up
  to £1,000,000 for a period of six months*. These are exceptional and short-lived deposits which result from certain major life events.
  Deposits which qualify as a temporary high balance are:
  - Money deposited in preparation for buying a property, the proceeds of sale of a property or proceeds from releasing equity in a property. This applies only to your main residence and excludes buy-to-
    let properties or holiday homes. General savings for a property do not qualify
  - Money paid in relation to a marriage or civil partnership or a divorce or dissolution of a civil partnership
  - A redundancy payout (whether voluntary or compulsory)
  - Compensation paid for unfair dismissal
  - Benefits paid in respect of a disability or incapacity*
  - Compensation paid for personal injury*
  - Benefits paid under an insurance policy
  - Compensation for a wrongful conviction
  - Benefits paid on retirement
  - Benefits payable on death
  - Compensation in respect of a person’s death
  - A legacy from the estate of a deceased person or money held on behalf of a deceased person for the purpose of administering their estate.
  * There is no limit to the compensation payable for deposits relating to personal injury or disability or incapacity claims.
  If a firm fails and you need to make a claim for deposits you have above
  £85,000, you will need to provide written evidence that your deposits qualify as a temporary high balance.
  You can find further information on the type of written evidence we require at www.fscs.org.uk .
  
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Insurance policies
Compensation limit
Our main aim is to get continuity of cover for policyholders with long-term insurance contracts.
This means, for example, we may try to transfer your insurance policy to a new insurance provider. If this is not possible, the level of compensation we can pay will depend on the type of policy you have:
- Motor insurance, Employers’ Liability insurance and Professional Indemnity insurance: the entire claim
  relating to the third-party element of your insurance, and 90% of any remaining elements of the claim.
- Death or incapacity of the policyholder due to injury, sickness or infirmity: the entire claim.
- Home, pet, travel and payment protection insurance (PPI) and other general insurances: 90% of your claim.
- Pension savings or retirement income (i.e. via an annuity): if it is provided under a life insurance contract we will pay the entire claim.
- Endowment policies or investment bonds: these are long- term life insurance policies, with a savings element, and we will pay
the entire claim.
FSCS can pay compensation if your insurance provider fails and cannot pay valid claims under your policy or return your premiums.
The types of policies we cover include motor, home, pet, travel and payment protection insurance (PPI). We also cover long-term insurance products such as life insurance or pensions - while pensions and annuities are often thought of as investment
products, in reality they are usually long-term insurance contracts.
We do not cover credit, marine, aviation or transport business insurance.

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Insurance broking
FSCS can pay compensation if:
- you were mis-sold an insurance policy and lost money and that firm failed, or
- you were a victim of fraud, and the broker who sold you the policy has gone out of business and cannot return your premiums or money owed to you.
  Compensation limit
  We can pay compensation of 90% of your claim with no upper limit. We protect 100% of any
  compulsory element of insurance, such as third-party motor insurance.
- The types of policies we cover include motor, home, pet, travel, payment protection insurance (PPI) and other general insurances.
Investment business

FSCS can pay compensation if the firm concerned has failed and cannot return your investments or money owed, and you lose money because of:

bad or misleading investment advice
negligent management of investments
misrepresentation, or
fraud.

Compensation limit

We protect up to £85,000 per person per authorised firm.

We do not pay compensation if your investment does not perform as well as you hoped.

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Mortgage (home finance) advice or broking
FSCS may be able to help if a firm has advised you to enter into a mortgage agreement that was not suitable for you, and you lost money as a result. If the firm goes out of business and cannot pay back the money it owes you, we can pay compensation. Whilst we cover the advice, we do not cover the lending or administration costs on the mortgage itself.
Debt management
If you hold money with a debt management company that failed after 1 April 2018, FSCS may be able to pay you compensation. But your debt management claim must meet all of the following criteria:
- The firm must have failed on or after 1 April 2018.
  
  Compensation limit
  We protect up to £85,000 per person per authorised firm.
- The firm must be authorised by the Financial Conduct Authority (FCA) and hold client money.
- The firm must have received or held the money through a UK branch in connection with the regulated activities of debt counselling or debt adjusting.
- The client money reconciliation process must show a shortfall in the amount of client money the firm held for you.
- The firm (or its principals) must be unable to meet claims for compensation.
- You must be eligible under FSCS rules.
  Compensation limit
  We protect up to £85,000 per person per firm.
  Money that a firm holds under a debt management plan may be covered, but FSCS does not protect money that a debtor pays under an individual voluntary arrangement arranged by insolvency partners (which are not regulated by the FCA) or debt advice.
  
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Funeral plans

If you have a funeral plan and your provider has gone out of business on or after

29 July 2022, you may be FSCS protected. This includes funeral plans bought before this date.

Your funeral plan provider must be regulated by the FCA – you can check on the Financial Services Register.

How we protect funeral plans

If your funeral plan provider goes out of business, it should have arrangements in place to ensure that a new regulated provider can carry out your funeral plan. Alternatively, it may provide you with compensation.

If these arrangements aren’t in place, FSCS will protect funeral plan holders of authorised funeral plan providers that have failed.

We will work with the failed firm, the FCA and the insolvency practioner (IP) to ensure that we have the information we need.

In most circumstances you won’t need to make a claim.

Replacement funeral plan

Where possible, we will seek to give you the option of entering into a new contract with a replacement regulated funeral plan provider. It would be a like-for-like replacement plan with the same terms as your original plan.

Where that’s not possible, it would have terms as similar as possible to the original.

Before we complete this process, we’ll ask you if you want to receive replacement cover. If you don’t, you can choose to receive compensation for your plan instead.

Compensation

If you would rather receive compensation, FSCS will calculate the amount by reference to what it would cost to buy the same plan on today’s market.

If we aren’t able to arrange a replacement funeral plan, we will pay you compensation on the same basis.

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Other types of funeral plan claim

From 29 July 2022, you may also be able to claim compensation for certain activities carried out by a funeral plan provider or their intermediaries (e.g funeral directors and will writers). Examples include advice to take out a funeral plan, or the way a funeral plan was set up.

The activity must have occurred on or after 29 July 2022. You can check if you can claim for these types of activities on the FSCS website.

If a funeral plan holder passes away and their funeral plan provider fails

If a plan holder were to pass away after their funeral plan provider fails, but before:

FSCS has yet to secure a new funeral plan contract with a new provider or pay compensation, and
the IP of the provider is not able to secure the provision of a funeral,
then FSCS may be able to help with the provision of a funeral.
Compensation limit
We protect up to £85,000 per eligible person, per firm. The compensation we pay is for actual losses incurred by a customer.
If you are a customer’s nominated representative or next of kin and this has happened, please contact the named funeral director in the original funeral plan, who will advise you on next steps. This will be the named firm of undertakers under the terms of the funeral plan, or in the absence of this information, the firm of undertakers you have selected.
Once you have contacted the funeral director, please notify us of your situation. You can contact us by phone, post or live chat – our customer service team is on hand to help.

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Who can claim compensation?

What does FSCS not cover?

We do not cover some financial products. Here are some examples:

Peer-to-peer lending
Money held on pre-paid credit cards
Christmas or other savings clubs
‘Boiler room’ scam investments – ‘products’ sold by unauthorised firms, often abroad, that defraud customers of their money
Losses arising purely from investment performance
Some electronic payment services (such as PayPal) or currency bureaux
Insurance policies for credit, marine, aviation or transport business
Reinsurance
Mortgage lending or administration.

In general, individuals and small companies can claim compensation from us. In the case of deposits, large companies are also able to claim compensation, although some exclusions may apply.

For general insurance, all policyholders are eligible to claim on the compulsory element of the protected insurance. Otherwise, small

companies must have an annual turnover of less than £1m to be eligible to claim compensation.

How long would it take to get my money back?

In most cases, for deposits, FSCS aims to pay compensation within seven days of a bank, building society or credit union failing. More complex cases will take longer.

For general insurance, we aim to make a payment within 14 working days of agreement of the claim.

For payment protection insurance (PPI) claims, FSCS aims to decide claims within three months.

For all other financial services products, we aim to resolve claims within six months.

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