An insolvency lawyer’s guide to the Financial Services Compensation Scheme
An insolvency lawyer’s guide to the Financial Services Compensation Scheme

The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:

  • An insolvency lawyer’s guide to the Financial Services Compensation Scheme
  • Brexit impact
  • Role and operation of the FSCS
  • Ranking of claims on insolvency

This Practice Note provides an overview of the role and operation of the Financial Services Compensation Scheme (FSCS) and the ranking of deposits protected by it in the waterfall of payments to creditors in the event of the insolvency of a relevant firm.

For further detail on the FSCS, the following Practice Notes can be found in Lexis®PSL Financial Services:

  1. The Financial Services Compensation Scheme

  2. Financial Services Compensation Scheme (FSCS)—the qualifying conditions for compensation

  3. Financial Services Compensation Scheme (FSCS)—automatic assignment or subrogation of rights

  4. Financial Services Compensation Scheme (FSCS)—payment or rejection of compensation, and

  5. Financial Services Compensation Scheme (FSCS)—funding

Brexit impact

This Practice Note is impacted by the decision of the UK on 23 June 2016 to leave the European Union.

The Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018, SI 2018/1285 were made on 3 December 2018 to address the deficiencies which arise from the withdrawal of the UK from the EU by amending legislation including Financial Services and Markets Act 2000, Financial Services Act 2012 and Deposit Guarantee Scheme Regulations 2015, SI 2015/486. This legislation is partly in force from 4 December 2018 and fully in force on exit date (as defined in section 20(1)–(5) of the European Union (Withdrawal) Act 2018).

The main impact is to:

  1. amend the definitions of ‘deposit’ and ‘eligible deposit’ which apply by