The Financial Services Compensation Scheme (FSCS) and pensions
Produced in partnership with Dentons
The Financial Services Compensation Scheme (FSCS) and pensions

The following Pensions guidance note Produced in partnership with Dentons provides comprehensive and up to date legal information covering:

  • The Financial Services Compensation Scheme (FSCS) and pensions
  • What is the FSCS?
  • What and who does the FSCS cover?
  • Division of the compensation rules between the PRA and the FCA
  • How is the FSCS funded?
  • To what extent are pension schemes covered?
  • What compensation is payable?
  • What are the qualifying conditions for compensation?
  • What is the process for making a compensation claim?
  • FSCS compensation versus PPF compensation

This Practice Note looks at the Financial Services Compensation Scheme (FSCS) in the context of pensions. For further information and detail on the FSCS in general, see the following Practice Notes, which are subscription dependent:

  1. The Financial Services Compensation Scheme

  2. The payment or rejection of compensation under the Financial Services Compensation Scheme (FSCS)

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

  4. Financial Services Compensation Scheme (FSCS)—funding

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

  6. Financial Services Compensation Scheme (FSCS)—rejection of application and withdrawal of offer

What is the FSCS?

The FSCS is the UK's statutory compensation fund for customers of most financial services firms authorised under the Financial Services and Markets Act 2000 (FSMA 2000). It came into force on 1 December 2001.

The FSCS technically consists of the rules establishing it (the Rules) that were originally made by the Financial Services Authority (FSA) and, after 1 April 2013, by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). These Rules as they apply to pensions are set out in the Compensation Handbook (COMP) and the Fees manual (FEES) of the FCA Handbook and the Policyholder Protection of the PRA Rulebook.

The FSCS has two main aims:

  1. protecting consumers by providing compensation when regulated firms fail—the rationale is that individual investors, depositors and policyholders are not