Financial Services Compensation Scheme

Question 1

What is the financial services compensation scheme?

Answer 1

The UK’s compensation fund of last resort for customers of deposit-taking companies and investment firms

Question 2

What claims does the FSCS get involved in?

Answer 2

Claims where its unlikely the firm is unable to pay claims against them (usually when the firm becomes insolvent or goes out of business)

Question 3

Who does the FSCS assist?

Answer 3

Mainly private individuals and small businesses (those with a turnover of less than 1 million)

Question 4

Why type of insurance does the FSCS cover?

Answer 4

Compulsory insurance, general and life insurance

Question 5

How much compensation will a customer receive?

Answer 5

Depends on type of policy and type of insurance (compulsory/non compulsory)

100% compensation for compulsory insurance (third party motor, employers liability and professional indemnity), long term insurance (life/pension) and certain claims for injury

90% compensation for general insurance

Question 6

How is the FSCS funded?

Answer 6

A levy on all authorised firms who receive an income from eligible claimants