The FSCS - Financial Services Compensation Scheme

The Financial Services Compensation Scheme (FSCS) is the compensation fund of last resort for customers of authorised financial services firms. If a firm is in default or ceases trading the FSCS may be able to pay compensation to its customers.

The FSCS is independent of the government and the financial industry, and was set up under the Financial Services and Markets Act 2000 (FSMA). The costs of the scheme are covered by the financial services industry - there is no charge to individual consumers for using the service.

Compensation levels and eligibility to claim

The availability of compensation depends on several factors, being:

  • The type and structure of the investments you choose within your products
  • Which party to the applicable contract is unable to meet its claims, whether Standard Life or the underlying asset provider for example, deposit taker, fund house, etc.
  • The country the investments are held in
  • Whether you are resident in the UK at the time you took out the product. If you were not resident in the UK, you may be eligible for compensation from an equivalent scheme in the country you were resident in

The compensation limits generally applied are for:

  • Deposits - covers deposits up to £85,000 for each eligible claim per banking group
  • Contracts of insurance - covers long-term policies such as life assurance and pension policies 100% without limit
  • Compulsory insurance - for example, car insurance, 100% without limit
  • Investment business (such as mutual funds) - covers up to £85,000
  • Mortgage advice - covers up to £50,000

The FSCS only pay compensation when an eligible claim has been identified. Keep in mind that:

  • When an authorised firm is in default, i.e. it is unable, or likely to be unable, to pay claims, an investigation will be carried out to establish whether or not this is the case
  • The FSCS was set up mainly to assist private individuals, although smaller companies and partnerships are also covered. It's important to understand if your investments are held under your name or pooled and held by a company as this may depend if FSCS compensation is available
  • The FSCS does not cover everyone. Please see 'Other compensation schemes' page

Your eligible deposits with Standard Life Trustee Company Limited and Standard Life Savings Limited are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme.

For more information on the FSCS please visit http://www.fscs.org.uk

or call
0800 678 1100
or
020 7741 4100

Please note only compensation queries should be directed to the FSCS

 

What would happen if an insurance company were to default?

If an authorised financial services firm defaults, the FSCS will work with the FCA to seek continuity by finding another provider to take on parts of the defaulting firm's business.

There are specific EU rules which apply to insurance companies on winding up - Solvency II Directive 2009/138/EC. The content of this directive means that claims of policyholders against an authorised insurance company take precedence over most other claims.

It is only if meeting these other claims means that the remaining assets are insufficient to meet the policyholder’s claims that a policyholder would need to turn to the FSCS.

      The FSCS is the compensation fund of last resort. Only when other avenues have been exhausted will the FSCS be called upon.

What would happen if a mutual fund manager were to default?

A fund manager is required to appoint a depository and custodian. One of the primary functions of the custodian is the safekeeping of securities and cash in deposit accounts, held in the name of the depository. This has the effect of segregating the funds from the fund manager’s own monies and effectively protects the client’s investments should the fund manager become insolvent.

From the client's perspective this means that the only time they should need to look to the FSCS for compensation would be in the event of the fund manager acting dishonestly, fraudulently or negligently.

The maximum level of compensation available for mutual fund investments is £85,000

This could also happen if you invested using the services of a Discretionary Investment Manager.

What would happen if a deposit-taker were to default?

The maximum level of compensation available is £85,000 per banking group. For people who hold multiple accounts in banks that are part of a larger group, then the level available will depend on the authorisation basis. If each of the banks is separately authorised by the FCA then the limit of £85,000 would apply per person per authorised institution. If each of the banks is not separately authorised then only one limit of £85,000 would apply, irrespective of how many different subsidiaries a person held accounts with.

Search for authorised banks, building societies and their subsidiaries

Take a look at our example below, this is based on the current protected limit:

  • Denise has £110,000 deposited in a failed bank where the administrator could pay depositor creditors 60p in the £1
  • She will get £85,000 from the FSCS in a reasonably short time after the bank was declared 'in default'
  • Her full rights are assigned to the FSCS
  • The FSCS will eventually get £66,000 from the administrator (60% of £110,000)
  • Denise will then get part of her remaining loss at the recovery rate of 60% of the excess over the protected limit, i.e. 60% of £25,000 = £15,000
  • So, Denise will receive payments totalling £100,000 from the FSCS

These cases would be dependent on eligibility factors, refer to the Investor Protection page.

 

Other UK compensation schemes

This is not intended to be an exhaustive list of compensation schemes, but to highlight the schemes that may apply to customers of Standard Life.

Financial Assistance Scheme

This is available to members of defined benefit (also known as final salary) schemes that started to wind up between 1 January 1997 and 5 April 2005, where the employer has become insolvent and the scheme is not able to pay out the full pension entitlement.

For further information please go to the Financial Assistance Scheme website

Pension Protection Fund

This is available to members of defined benefit schemes where the employer has become insolvent after 5 April 2005 and the scheme is not able to pay out the full pension entitlement.

For further information please go to the Pension Protection Fund website

Overseas compensation schemes

This is not intended to be an exhaustive list of overseas compensation schemes, but to highlight the schemes that may apply to customers of Standard Life. If a deposit account is based offshore then there is no compensation available from the FSCS - policyholders may need to look at a local scheme to see whether there is any protection available to them.

Ireland

Deposit accounts held with Irish banks and building societies may be covered by the Irish government’s guarantee.

For further information please go to the Central Bank of Ireland website

Jersey

Jersey has a Depositors Compensation Scheme which provides protection per person, per Jersey banking group.

For further information please go to the States of Jersey website

Guernsey

Guernsey has a Depositors Compensation Scheme which provides protection per person, per licensed bank.

For further information please go to the Guernsey Banking Deposit Compensation Scheme website

Isle of Man

The Isle of Man has a Depositors Compensation Scheme which provides protection per person, per licensed deposit taker.

For further information please go to the Isle of Man Financial Supervision Commission website