Financial Services Compensation Scheme (FSCS)

The Financial Services Compensation Scheme provides protection to consumers of UK-authorised financial firms that become insolvent and cannot meet their obligations. It is funded by a levy on all FCA-authorised firms. For bank deposits, FSCS covers up to £120,000 per eligible person, per authorised firm, so a joint account with two holders is protected up to £240,000; the limit rose from £85,000 on 1 December 2025, for firms that fail from that date. Certain temporary high-balance situations — such as house sale proceeds — are covered up to £1.4 million in most cases (with no limit where the balance is linked to personal injury or incapacity), for up to six months.

For investment claims, FSCS covers up to £85,000 per person for bad advice or mis-selling by an FCA-authorised firm. For insurance, the limit is generally 90% of the claim. The scheme does not cover the performance of investments (i.e., losses from market falls), nor losses where the firm was not FCA-authorised — which is why dealing with authorised firms is so important.

From a fraud perspective, FSCS is relevant where an authorised firm acts as the vehicle for the scam (e.g., a pension liberation scheme operated through a regulated firm) or where victims were mis-sold high-risk investments. FSCS coverage is not available for losses in purely unauthorised scams — another critical reason to verify FCA authorisation before investing.