Investor compensation and redress

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This overview is a guide to the Lexis+® UK Financial Services content within the 'Investor compensation and redress' sub-topic, with links to appropriate materials.

It considers the role and scope of the Financial Services Compensation Scheme (FSCS).

The two existing EU guarantee scheme directives, the Investor Compensation Schemes Directive (Directive (EC) 97/9) (ICSD) and the recast Deposit Guarantee Schemes Directive (Directive 2014/49/EU) (recast DGSD), require Member States to establish, respectively, investor and depositor protection schemes, offering minimum levels and scope of protection to customers of ICSD and DGSD firms.

The UK has met these obligations through the Financial Services Compensation Scheme (FSCS). (For the impact of the UK’s withdrawal from EU (‘Brexit’), see below).

Where an authorised firm is unable to meet its liabilities to a customer, that customer may be able to claim compensation from the FSCS.

The FSCS is established under Part XV of the Financial Services and Markets Act 2000 (FSMA 2000). It is independent of both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) and the government and does not charge claimants for using

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Latest Financial Services News

Treasury Committee publishes correspondence on FCA motor finance redress scheme

The Treasury Committee has published correspondence from the Financial Conduct Authority (FCA) confirming its intention to consult on an industry-wide redress scheme for motor finance customers. The FCA’s decision follows the Supreme Court’s ruling that brokers—typically car dealers— did not owe a fiduciary duty to customers. The FCA aims to publish the consultation by early October 2025 and begin compensation payments in 2026.

BoE speech outlines vision for a UK ‘multi-money’ mixed ecosystem

The Bank of England (BoE) has published a speech by its deputy governor for financial stability, Sarah Bredeen, delivered at the BoE and Warwick Business School Innovation in Money and Payments Conference. Breeden outlines a proposed payments framework designed to enable a seamless exchange between various forms of money, including traditional and tokenised commercial bank deposits, stablecoins and central bank money,  and at the same time protect financial stability and trust in money.

EPC Directory Service goes live in support of the VOP Scheme

The European Payments Council (EPC) has announced the successful launch of the EPC Directory Service (EDS) in live mode to support the Verification of Payee (VOP) scheme. All participants and Routing and Verification Mechanisms (RVMs) registered during the test phase are automatically recognised in the live environment, with data entered before 22 August 2025 migrated accordingly, later entries must be re-entered manually.

PSR annual report and accounts for 2024-25

HM Treasury has published the Payment Systems Regulator’s (PSR) annual report and accounts for 2024-25, summarising the PSR’s activities over the past year. Among other things, the PSR has deepened collaboration with the Financial Conduct Authority (FCA), Bank of England, and other stakeholders, laying the groundwork for its planned consolidation into the FCA. This transition aims to streamline regulation and improve efficiency while maintaining the PSR’s statutory remit until legislation is enacted.

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