Financial Services Compensation Scheme

The Financial Services Compensation Scheme provides protection for customers of failed financial services firms.

FSCS-related news and publications

29 March 2019: We published Policy Statement 10/19 'Financial Services Compensation Scheme – Management Expenses Levy Limit 2019/20’.

Update 28 February 2019: We published near-final policy to deliver the general approach being taken to ensure there is a functioning legal framework when the UK leaves the EU. This includes an update to Supervisory Statement 18/15 ‘Depositor and dormant account protection’.

Overview

The Prudential Regulation Authority (PRA) is responsible for oversight of, and rules relating to, the Financial Services Compensation Scheme (FSCS) in respect of deposit and insurance policy protection. These rules are set out in the PRA Rulebook

Impacts of EU Withdrawal on FSCS protection

FSCS protection for customers of UK branches of UK authorised firms will not change as a result of the UK leaving the EU, regardless of whether the UK leaves the EU with or without a deal. This means that in the large majority of cases, existing FSCS protection will continue.

If the UK leaves the EU with a deal, there will be an Implementation Period. During the Implementation Period, existing FSCS protections will not change as a result of as a result of the UK’s withdrawal from the EU.

If the UK leaves the EU without a deal, there will be no Implementation Period. In this scenario, the scope of FSCS protection (the firms for which protection is available) will change, although the limits on the amounts of compensation will not. The lists of firms covered by the FSCS would be updated.

Consumers should refer to their firms for more information. 

Please refer to the FCA for FSCS protection relating to other financial services products.

Depositor Protection

Depositors with eligible deposits held by UK establishments of firms with Part 4A permission to accept deposits (or deemed Part 4A permission) will be protected by the FSCS. 

Except in respect of Gibraltarian establishments of UK firms (see below), deposits held outside of UK establishments will not be protected by the FSCS.

Deposits held by UK firms’ branches in the EEA will not be protected by the FSCS, but may be protected by the relevant EEA State’s deposit guarantee scheme depending upon the depositor protection regime in that EEA State.

Gibraltar

The UK’s depositor protection in relation to Gibraltar would remain the same as prior to EU withdrawal: eligible deposits held by UK firms’ Gibraltarian establishments would continue to be FSCS protected.  Deposits held by UK establishments of Gibraltarian-based credit institutions (credit institutions incorporated and with their head offices in Gibraltar) would not be protected by the FSCS; their protection would remain the responsibility of Gibraltar.

Policyholder protection

Policies issued prior to EU withdrawal

Existing FSCS protection for insurance policies issued prior to EU withdrawal would be maintained as long as the insurer remains a 'relevant person' under FSMA. Status as a ‘relevant person’ is achieved by a firm being an ‘authorised person’ under FSMA at the time of the act or omission giving rise to the claim. Firms will be ‘authorised persons’ if they have a Part 4A permission, are an insurer within the Temporary Permission Regime or Supervised Run-off under the Financial Services Contracts Regime (with a deemed Part 4A permission), fall within Contractual Run-off under the Financial Services Contracts Regime, or have the benefit of market access rights via the Gibraltar Order for Gibraltarian-based firms. 

Where an insurer transfers FSCS-protected insurance liabilities to an insurer without UK authorisation, FSCS protection will only be available for claims in respect of acts or omissions (‘insured events’) that arose before the transfer to the non-authorised successor.

Policies issued after EU withdrawal

Policies in respect of risks situated in the UK, Gibraltar, Channel Islands and Isle of Man issued by 'relevant persons' after exit may be FSCS protected, depending upon the location of the establishment through which the policy is issued.  The FSCS will not protect policies issued after EU withdrawal in respect of EEA risks.

Amounts of compensation: deposits

Deposits held in banks, building societies and credit unions (including in Northern Ireland) that are authorised by the PRA are protected up to £85,000. This includes, for example, eligible deposits in current accounts, savings accounts, cash ISAs (held with a deposit taker) or savings bonds.

The deposit protection limit applies to the total eligible deposits of each person, per PRA-authorised firm. So for deposits in a joint account, this means that each account holder is protected up to the deposit protection limit, i.e. the total protection adds up to two times £85,000.

A PRA-authorised firm may own several banking and building society brands. This means that anyone who has deposits in more than one account under a single brand, or multiple accounts under different brands owned by a single firm, is only protected up to a total of £85,000 across all these accounts.

There will be temporary deposit protection for up to 6 months above the £85,000 limit for certain types of deposits classified as temporary high balances, such as the proceeds from private property sales. Protection will be up to £1million in most cases.

People with eligible deposits that add up to more than the deposit protection limit may wish to take steps to keep their deposits fully protected (e.g. by splitting their deposits across different PRA-authorised firms).

International banks in the UK

Depositors in some overseas firms in the UK (not including the Channel Islands or Isle of Man) are protected by the FSCS up to the deposit protection limit.

These include:

  • UK-incorporated subsidiaries of European Economic Area (EEA) deposit-takers
  • UK-incorporated subsidiaries of non-EEA deposit-takers
  • UK branches of non-EEA deposit-takers authorised by the PRA to accept deposits in the UK.

Eligible depositors in UK branches of EEA banks are protected by the deposit guarantee scheme in the bank’s home state, usually up to a limit of €100,000. They are not covered by the FSCS. For more information on the extent and nature of non-UK deposit guarantee schemes, please refer directly to those schemes. If you are not sure how your money is protected, you can contact your bank for information.

Lists of the banking brands and building society brands that are covered by the FSCS

Lists of the banking brands and building society brands that are covered by the FSCS are available below. These show:

  • the main banking and building society brands
  • which PRA-authorised firm owns that brand
  • the unique 'firm reference number' (FRN) of that PRA-authorised firm
  • other brands owned by the same PRA-authorised firm.

Historical list of banks and building societies covered by the compensation scheme

Insurance contracts: compensation scheme coverage

To be protected by the FSCS, insurance policyholders must have a protected insurance contract and be eligible to receive compensation.

Protected insurance policies

To be protected, an insurance policy, generally, must:

  1. Be a ‘relevant’ general insurance contract or a long-term insurance contract. Further details on the types of general insurance contracts and long-term insurance contracts protected by the FSCS can be found in the policyholder protection part of the PRA Rulebook.

  2. Not be a reinsurance contract.

  3. Be issued by a relevant firm through an establishment in the UK, another EEA state, the Channel Islands or the Isle of Man. Generally the policy will be protected by the FSCS if the policy is issued by:
    • A UK based insurer with a UK establishment (e.g. a UK firm, a UK branch of an EEA or non-EEA firm, a UK insurer providing cross-border services in another EEA state).
    • An EEA insurer providing cross-border business into the UK (e.g. via a website).
    • A UK branch in another EEA state.
    • An insurer with an establishment in the Channel Islands or Isle of Man.
      FSCS cover is not available to policyholders with claims against firms that do not have the relevant UK or EEA passport authorisation to bring them within the scope of FSCS cover. This includes any policyholder of a subsidiary of a UK group based in any non-EEA state.
  4. Relate to a protected risk or commitment:
    • For policies issued by a UK-based insurer, the risk or commitment must be located in the UK, another EEA state, the Channel Islands or Isle of Man.
    • For policies issued through an EEA insurer with an EEA establishment providing cross-border services into the UK (e.g. via a website), FSCS protection covers UK risks or commitments only.
    • For policies issued by a UK branch in another EEA state, the risk or commitment must be situated in the UK or another EEA state.
    • For policies issued through an establishment in the Channel Islands or Isle of Man, the risk or commitment must be situated in the UK, Channel Islands or Isle of Man.
    • For more information on how ’risk or commitment’ is determined, refer to section 9.5 of the Policyholder Protection Part of the PRA Rulebook.

Eligible claimants

Not all policyholders are eligible to claim compensation from the FSCS. For claims relating to general insurance, most private individuals and small businesses are eligible for protection. For long-term insurance most claimants, including large businesses, are eligible for protection.

Provided that the claim is a protected contract of insurance, there are no exclusions from eligibility for claims under insurance contracts that cover compulsory insurance

Amounts of compensation: insurers

If, on and from 3 July 2015, an insurance firm has been declared in default and the FSCS is satisfied that a claim is protected and the claimant is eligible (in accordance with policyholder protection rules), the following compensation from the FSCS is available:

Compensation for general insurance contracts

  • Where the claim is in respect of a liability subject to compulsory insurance, a liability subject to professional indemnity insurance, or death or incapacity of the policyholder due to injury, sickness or infirmity: 100% of the claim.
  • All other cases: 90% of the claim.

Compensation for long-term insurance contracts

  • 100% of the claim is available for all long-term insurance claims.

For general insurance, the FSCS must calculate the value of the firm’s liability to the claimant in accordance with the contract terms, and pay that amount, subject to any limits, to the claimant.

For long-term insurance, unless the FSCS is trying to secure continuity of cover, it must calculate the value of the firm’s liability to the claimant in accordance with the contract terms as valued in a liquidation of the insurer, or in the absence of this, in accordance with valuation techniques that the FSCS considers appropriate.

This may mean that policyholders will lose some of the value. 

List of insurers covered by the compensation scheme

These lists set out the UK-authorised (i.e. regulated by the PRA) and European Economic Area (EEA)-authorised insurers operating in the UK. We update these lists twice a year.

Lists of UK-authorised insurers and EEA-authorised insurers

We update our list of Lloyd’s of London syndicates annually.

List of Lloyd's of London syndicates

Historical versions of the insurers lists are available.

This page was last updated 05 April 2019
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