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

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

  • An insolvency lawyer’s guide to the Financial Services Compensation Scheme
  • Role and operation of the FSCS
  • What is the FSCS?
  • What types of financial institution are covered by the FSCS?
  • Who is eligible to claim compensation?
  • In what circumstances can compensation be claimed?
  • What claims are covered by the FSCS?
  • Assignment of claims
  • Compensation limits
  • Timescales for payment of compensation
  • More...

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

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

Role and operation of the FSCS

What is the FSCS?

The FSCS was established by the Financial Services and Markets Act 2000 (FSMA 2000) as an independent body which provides protection to customers in the event of a financial institution or financial services firm becoming unable, or likely to be unable, to pay claims against it (ie it is ‘in default’). It is a statutory fund of last resort and will provide a degree of compensation if claims cannot be paid by anyone else.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) are responsible for the rule making and oversight of the FSCS. The FSCS is a non-profit-making body, funded by levies charged on participant firms. The Compensation

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