The Financial Services Compensation Scheme
Produced in partnership with Honor Levy, financial services consultant
The Financial Services Compensation Scheme

The following Financial Services guidance note Produced in partnership with Honor Levy, financial services consultant provides comprehensive and up to date legal information covering:

  • The Financial Services Compensation Scheme
  • Administration of the FSCS
  • Making a claim
  • Obligations for regulated firms
  • Obtaining compensation—the different regimes
  • Compensation limits

The Financial Services Compensation Scheme (FSCS) came into force on 1 December 2001 (although still covers claims from before that date) and is established under Part XV of the Financial Services and Markets Act 2000 (FSMA 2000). It is a statutory compensation scheme of last resort for customers of firms authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA). The FSCS is funded by levies placed on authorised firms and is independent of the FCA, the PRA and the government. It does not charge claimants for using its service. Since 1 April 2013, the PRA and the FCA have been jointly responsible for the rule making and oversight of the FSCS, and the three bodies entered into a memorandum of understanding (MOU) detailing how they will cooperate in carrying out their functions with regard to the compensation scheme. The MOUs can be read here (PRA/FSCS) and here (FCA/FSCS). Detailed compensation scheme rules can be found in the following ancillary Practice Notes:

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

  2. Financial Services Compensation Scheme (FSCS)—payment or rejection of compensation

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

  4. Financial Services Compensation Scheme (FSCS)—funding

The role of the FSCS is to compensate certain persons, usually individuals or small firms, if a firm has stopped trading or does not