This short guide is intended to give you an overview of the Financial Services Compensation Scheme (FSCS).

Should you require more detailed information please call us on 0845 074 7778 or 0115 933 8433 and ask to speak with one of our advisers.

The Financial Services Compensation Scheme website also provides more information; this can be found by clicking here.

What is it?

The FSCS is the UK’s statutory fund of last resort for customers of financial services firms.

This means that the FSCS can pay compensation to consumers if a financial services firm is unable, or likely to be unable, to pay claims against it.

The FSCS is an independent body, set up under the Financial Services & Markets Act 2000 (FSMA) and does not charge individual consumers for using its service.

What does it cover?

The FSCS covers business conducted by firms authorised by the Financial Services Authority (FSA).

European firms (authorised by their home state regulator) that operate in the UK may also be covered.

The FSCS was set up mainly to assist private individuals, although smaller businesses are also covered.

Larger businesses are generally excluded, although there are some exceptions to this for deposit and insurance claims.
The FSCS protects the following:

  • Deposits
  • Insurance policies
  • Insurance broking (for business on or after 14 January 2005), including connected travel insurance where the policy is sold alongside a holiday or other related travel (e.g. by travel firms and holiday providers) (for business on or after 1 January 2009);
  • Investment business
  • Home finance (for business on or after 31 October 2004).

What are the compensation limits?

There are maximum levels of compensation which you could be entitled to, these depend on which category the product you have bought or invest in falls into.

The maximum levels of compensation can be summarised as follow:

Deposits

This covers money in current accounts, savings accounts etc, issued by banks, building societies and credit unions.

Compensation limit is 100% of the first £85,000 per individual per authorised firm.

Compensation limits apply to individuals and not accounts. Therefore for joint accounts the limit applies to each named account holder meaning that if a joint account is held each spouse or partner could claim up to £85,000.

Investments

The FSCS can pay compensation to consumers who lose money because of bad or misleading advice, negligent management of investments, misrepresentation or fraud, and the firm concerned has gone out of business and can’t return your investments or money owed.

Compensation is not payable for losses arising solely from investment performance.

For firms declared in default from 1st January 2010 the maximum compensation is £50,000 per person per firm

For firms declared in default before 1st January 2010 the maximum level of compensation for claims is 100% of the first £30,000 and 90% of the next £20,000, up to £48,000 per person per firm.

Home finance (mortgages)

The FSCS can pay compensation if a firm has advised you to enter into a mortgage agreement that wasn’t suitable for you, and you lost money as a result, and the firm concerned goes out of business and can’t return money owed to you.

For firms declared in default from 1st January 2010 the maximum compensation is £50,000 per person per firm.

For firms declared in default before 1st January 2010 the maximum level of compensation for claims is 100% of the first £30,000 and 90% of the next £20,000, up to £48,000 per person per firm.

Insurance

The FSCS can pay compensation if your insurance firm becomes insolvent and can’t pay valid claims under the policy or return your premiums. They don’t however cover policies on marine, aviation, transport business, credit insurance or reinsurance.

The FSCS’s main aim is to secure continuity of cover for policyholders, for example, they will try to transfer your insurance policy to a new insurance provider. If that is not possible they can pay compensation at the level of 90% of the value of your claim with no upper limit.

Some compulsory insurance, like third-party motor insurance, is protected in full.

A special note about Banks and Building Societies

The issues surrounding UK Banks and Building Societies over the last two years have highlighted the role played by the FSCS.

Savers now have to consider not only how best to invest their money so that the best possible rate of interest is received, but also need to consider the amount they hold with any single institution due to the £85,000 limit on claims.

With mergers and acquisitions happening at an unprecedented level it can often be hard to keep up with the changes. If you are not careful you could unwittingly end up with more than £85,000 with a single institution even if the savings are spread across different brands.

Regardless of the brand, a firm must disclose who ultimately holds deposits on your behalf. This information can be found in the firms’ product information; however the following table shows which brands come under which authorisation.

Banking & saving brand FSA authorised institution FRN Other brands covered by FSA authorisation
The AA (1) Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 Bank of Scotland, Birmingham Midshires, Capital Bank, Halifax, Intelligent Finance, Saga (1), St James’s Place Bank
Alliance & Leicester (2) Santander UK plc 106054 Bradford & Bingley (2), Cahoot, Santander
Bank of Ireland (UK) Bank of Ireland (UK) plc 512956 Post Office (3)
Bank of Scotland Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Birmingham Midshires, Capital Bank, Halifax, Intelligent Finance, Saga (1), St James’s Place Bank
Barclays Bank Barclays Bank plc 122702 Standard Life Bank
Birmingham Midshires Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Capital Bank, Halifax, Intelligent Finance, Saga (1) St James’s Place Bank
Bradford & Bingley (2) Santander UK plc 106054 Alliance & Leicester (2), Cahoot, Santander
Britannia The Co-operative Bank plc 121885 The Co-operative, Smile
Cahoot Santander UK plc 106054 Alliance & Leicester (2), Bradford & Bingley (2), Santander
Capital Bank Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Birmingham Midshires, Halifax, Intelligent Finance, Saga (1), St James’s Place Bank
Cater Allen Cater Allen Ltd (part of Santander UK plc) 178737
Cheltenham & Gloucester Lloyds TSB Bank plc (part of Lloyds Banking Group plc) 119278 Lloyds TSB
Child & Co (4) Royal Bank of Scotland plc 121882 Direct Line (5), Drummonds Bank (4), Holt’s (6), Royal Bank of Scotland
Citibank Citibank, N.A. 124704
Clydesdale Bank Clydesdale Bank plc (part of National Australia Group Ltd) 121873 Yorkshire Bank
The Co-operative Bank The Co-operative Bank plc 121885 Britannia, Smile
Coutts & Co Coutts & Co (part of Royal Bank of Scotland plc) 122287
Direct Line (5) Royal Bank of Scotland plc 121882 Child & Co (4), Drumonds Bank (4), Holt’s (6), Royal Bank of Scotland
Drummonds Bank (4) Royal Bank of Scotland plc 121882 Child & Co (4), Direct Line (5), Holt’s (6), Royal Bank of Scotland
Egg (7) Yorkshire Building Society 106085 Barnsley Building Society, Chelsea Building Society, Norwich & Peterborough Building Society, Yorkshire Building Society
First Direct HSBC Bank plc 114216 HSBC
Halifax Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Birmingham Midshires, Capital Bank, Intelligent Finance, Saga (1), St James’s Place Bank
HFC Bank HFC Bank Ltd (part of HSBC) 204483
Holt’s (6) Royal Bank of Scotland plc 121882 Child & Co (4), Direct Line (5), Drummonds (4), Royal Bank of Scotland
HSBC HSBC Bank plc 114216 First Direct
Intelligent Finance Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Birmingham Midshires, Capital Bank, Halifax, Saga (1), St James’s Place Bank
Investec Bank Investec Bank plc 172330
Lloyds TSB Lloyds TSB plc (part of Lloyds Banking Group plc) 119278 Cheltenham & Gloucester
Lloyds TSB Scotland Lloyds TSB Scotland plc (part of Lloyds Banking Group) 191240
Marks & Spencer Money Marks & Spencer Financial Services (part of HSBC) 151427
NatWest National Westminster Bank plc (part of Royal Bank of Scotland) 121878
Northern Rock Northern Rock plc (part of Virgin Money Holdings (UK) Ltd) 503963 Virgin Money
Post Office (3) Bank of Ireland (UK) plc 512956 Bank of Ireland (UK) plc
Royal Bank of Scotland Royal Bank of Scotland plc 121882 Child & Co (4), Direct Line (5), Drummonds Bank (4), Holt’s (6)
Saga (1) Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Birmingham Midshires, Capital Bank, Halifax, Intelligent Finance, St James’s Place Bank
Sainsbury’s Bank Sainbury’s Bank plc (8) 184514
Santander Santander UK plc 106054 Alliance & Leicester (2), Bradford & Bingley (2), Cahoot
Scottish Widows Bank Scottish Widows Bank plc (part of Lloyds Banking Group plc) 201601
Smile The Co-operative Bank plc 121885 Britannia, The Co-operative Bank
St James’s Place Bank Bank of Scotland plc (part of Lloyds Banking Group plc) 169628 The AA (1), Bank of Scotland, Birmingham Midshires, Capital Bank, Halifax, Intelligent Finance, Saga (1)
Standard Chartered Standard Chartered Bank 114276
Standard Life Bank Barclays Bank plc 122702 Barclays Bank
Ulster Bank Ulster Ltd (part of Royal Bank of Scotland plc) 122315
Unity Trust Bank Unity Trust Bank plc (part of the Co-operative Bank 204570
Virgin Money Northern Rock plc (part of Virgin Money Holdings (UK) Ltd) 503963 Northern Rock
Yorkshire Bank Clydesdale Bank plc (part of National Australia Group Ltd) 121873 Clydesdale Bank

Source: The Financial Services Authority

Notes:

(1) Savings products provided by Birmingham Midshires, part of Bank of Scotland plc
(2) This brand no longer exists, after being rebranded to Santander
(3) Savings products provided by Bank of Ireland (UK) plc
(4) Private banking house provided by Royal Bank of Scotland plc
(5) Savings products provided by Royal Bank of Scotland plc
(6) Private military bank provided by Drummonds Bank, part of Royal Bank of Scotland plc
(7) Savings products now provided by Yorkshire Building Society, rather than Egg Banking plc which remains part of Citigroup – see our list of building society brands
(8) Sainsbury’s Bank plc is a joint venture between J Sainsbury plc and Lloyds Banking Group plc

Important Information

The information in this table is correct as at 7 January 2011.

This table lists only the deposit-taking parts of groups and is not a complete group structure.

Deposit takers authorised in other EEA countries are not included here unless they are separately authorised by the FSA.

This is not a complete list of deposit takers covered by the FSCS.

Further information

More information about the FSCS by following the links below:

FSCS website

FSA website