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.
The availability of compensation depends on several factors, being:
The compensation limits generally applied are for:
The FSCS only pay compensation when an eligible claim has been identified. Keep in mind that:
For more information on the FSCS please visit http://www.fscs.org.uk
Please note only compensation queries should be directed to the FSCS.
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.
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.
This could also happen if you invested using the services of a Discretionary Investment Manager.
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.
Take a look at our example below, this is based on the current protected limit:
These cases would be dependent on eligibility factors, refer to the Investor Protection page.
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.
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
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
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.
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 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 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
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