What is the FSCS?

The Financial Services Compensation Scheme (FSCS) is the UK’s compensation fund for customers of authorised financial services firms. It is an independent compensation scheme set up under the Financial Services and Markets Act 2000 (FSMA), and individuals can use it when a financial services firm is unable to pay claims made against it.

What is FSCS?

The FSCS (Financial Services Compensation Scheme) is often referred to as a ‘last resort’ for customers when something goes wrong, and has been in operation since 2001. If a financial services company is authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) and stops trading, goes bust or doesn’t have enough assets to pay claims made against it, the FSCS can help compensate its customers.

The compensation scheme is free of charge for individuals and the FSCS can provide different levels of compensation depending on the type of investment involved. The FSCS protects the following investments:

  • Deposits

  • Insurance policies (including a pension you may have bought with money from a private pension scheme)

  • Insurance broking (for business from 14 January 2005)

  • Investment business

  • Mortgage advice and arranging (for business from 31 October 2004)

The FSCS may be able to compensate you in other circumstances if the following conditions apply:

  • You were a customer of a company or individual authorised by the FCA

  • The company or individual has gone out of business

  • You have lost money as a result

How is my pension protected?

The FSCS primarily protects investments and doesn’t protect all types of pensions. If you have a defined contribution pension, which includes personal pensions, a self employed pension and some workplace pensions, it will typically be run by a pension provider. If the pension provider should go out of business, and is authorised by the FCA, the FSCS could compensate you for up to 100% of the value of your pot.

If you have a workplace pension that’s run by a trust chosen by your employer, it is unlikely to be protected by the FSCS. If you have any concerns about the security of your pension you should contact your place of work, or the trustees, for further information.

If you have a defined benefit workplace pension, where your pot is valued based on your salary and how long you’ve worked for your employer, you’ll need to contact a different pension compensation scheme.

If your employer goes out of business or the defined benefit pension scheme cannot pay out your benefits, you may be able to claim compensation from the Pension Protection Fund. Should your claim be successful, the amount you could receive will depend on whether you’ve already reached retirement. If you’ve already reached retirement age you could get 100% of the value of your pot and if you haven’t reached retirement age yet, you could get 90% of the value of your pot.

If you have certain pension investment products such as an annuity, and the company providing it goes bust, the FSCS may be able to help you get compensation, up to 100% of the current value of your pension pot. If you have a Self Invested Personal Pension, and an underlying product within it such as investments, insurance or deposits fails, you may also be able to claim compensation from the FSCS.

PensionBee and FSCS

PensionBee is a proud member of the Financial Services Compensation Scheme. If something happens to our money managers, which is where your money is kept, your pension will be protected by the Financial Services Compensation Scheme up to 100%. We’ll also pursue any compensation on your behalf.

Last edited: 30-09-2018

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