People in the UK have even more financial protection than before from today (Monday 1 April).
The Financial Services Compensation Scheme (FSCS) limit has been raised to £85,000 for more of the financial products it covers. This follows an FCA consultation on FSCS’s funding arrangements.
As well as protecting deposits up to £85,000 in banks, building societies and credit unions, the higher FSCS limits cover investments, mortgage advice, life and pensions advice, debt management and long-term care insurance.
Here is the full list of products to which the new limits apply:
- Investment provision is now £85,000 per person per firm, up from £50,000.
- Investment intermediation is now £85,000 per person per firm, up from £50,000.
- Home finance intermediation is now £85,000 per person per firm, up from £50,000.
- Life and pensions intermediation is now £85,000 per person per firm, up from £50,000.
- Debt management is now £85,000 per person per firm, up from £50,000.
- Long-term care insurance is now 100% of the claim per person per firm, up from £50,000.
Customers of firms that are declared to have failed (in default) before 1 April 2019 will be covered up to the previous £50,000 limits. The new limits apply to claims against firms that fail on or after 1 April 2019.
Mark Neale, FSCS Chief Executive, says:
“Increasing our limits for the wide range of products and services that we cover further strengthens financial confidence and means people will have protection for more of their money.
“People can be assured that if they lose money as a result of the failure of their investment provider or adviser, their mortgage adviser, their debt management provider, or their long-term care insurer, FSCS can now provide a higher level of protection.”
Media enquiries
James Tweed
T: 020 7375 8646
Anthony Ozimic
T: 020 7375 8638
E: publicrelations@fscs.org.uk
Notes for Editors
FSCS is the UK's statutory compensation scheme for customers of authorised financial services firms. It was set up by Government in 2001 and is funded by the financial services industry. FSCS protects deposits, investment business, home finance (mortgage) advice, general insurance, insurance broking and debt management. FSCS can pay for financial loss if a firm is unable, or likely to be unable, to pay claims against it. The following limits apply:
- Deposits: £85,000 per person per authorised deposit-taker (for claims against firms declared in default from 30 January 2017). For more details visit ourDeposit Limits
- Investments and home finance: £85,000 per person per firm (for claims against firms declared in default from 1 April 2019). For more details visit ourInvestment LimitsandHome Finance Limits
- General insurance advice and arranging claims: 90% of the claim is protected with no upper limit. Compulsory insurance is 100% (for business conducted on or after 14 January 2005). For more details visit ourInsurance Limits
- Debt management: £85,000 per person per firm (for claims against firms declared in default from 1 April 2019). For more details visit ourDebt Management
FSCS is an independent body, set up under the Financial Services and Markets Act 2000 (FSMA), and does not charge individual consumers for using its services.
Declaring a firm in default
Before FSCS can pay compensation, it must be satisfied that a firm does not have sufficient assets to meet claims. It describes this as being ‘in default’. The Scheme will declare a firm in default if:
- it has received at least one claim; and
- it is satisfied that the firm is unable (or likely to be unable) to pay claims against it.
FSCS is required to do this before it can pay compensation to eligible claimants.
Declaring a firm in default allows consumers who believe they may have lost money as a result of their dealings with that firm to apply to the Scheme.
Authorised firms
Dealing with a Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA) authorised firm gives consumers access to the Financial Ombudsman Service (FOS) and FSCS. Consumers can check that the firm they are dealing with is authorised by using the FCA’s Financial Services Register found here: http://www.fca.org.uk/firms/systems-reporting/register
Broadcast media
An ISDN line is available if you are interested in arranging a radio interview with FSCS’s CEO. Please get in touch with our public relations team atpublicrelations@fscs.org.uk to arrange a suitable time and date.
As a seasoned financial expert with a comprehensive understanding of the UK financial landscape, I can affirm that the recent adjustments to the Financial Services Compensation Scheme (FSCS) in the UK, effective from April 1, 2019, mark a significant enhancement in financial protection for consumers. The FSCS, established in 2001 by the UK government, serves as the statutory compensation scheme for customers of authorized financial services firms, funded by the financial services industry.
The increase in the FSCS limit from £50,000 to £85,000 demonstrates a commitment to bolstering financial confidence and safeguarding a broader spectrum of financial products and services. This elevation in protection applies not only to deposits in banks, building societies, and credit unions but also extends to various other financial products. The expanded FSCS limits now cover investments, mortgage advice, life and pensions advice, debt management, and long-term care insurance.
To provide a comprehensive overview, let's delve into the specific adjustments made to the FSCS limits across different financial products:
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Investment Provision and Intermediation:
- The FSCS limit for investment provision and intermediation has increased to £85,000 per person per firm, up from the previous limit of £50,000. This includes protection for individuals who experience losses due to the failure of their investment provider or adviser.
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Home Finance Intermediation:
- The FSCS limit for home finance intermediation has also risen to £85,000 per person per firm, providing increased protection for individuals seeking mortgage advice.
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Life and Pensions Intermediation:
- The FSCS limit for life and pensions intermediation has been elevated to £85,000 per person per firm, up from £50,000. This ensures enhanced protection for individuals relying on advice related to life insurance and pensions.
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Debt Management:
- The FSCS limit for debt management has been raised to £85,000 per person per firm, extending protection to individuals who may suffer financial losses as a result of the failure of their debt management provider.
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Long-Term Care Insurance:
- Long-term care insurance now enjoys 100% coverage of the claim per person per firm, a substantial increase from the previous limit of £50,000.
It's crucial to note that these elevated limits apply to claims against firms that fail on or after April 1, 2019. Customers of firms declared to have failed before this date will still be covered up to the previous £50,000 limits. Mark Neale, the Chief Executive of FSCS, emphasizes that these increased limits strengthen financial confidence, assuring individuals that a higher level of protection is in place for their financial assets.
In conclusion, the adjustments to the FSCS limits exemplify a proactive approach by the UK financial authorities to fortify consumer protection in an ever-evolving financial landscape. These changes extend the safety net for individuals across a diverse range of financial products, fostering increased trust and confidence in the financial services sector.
