FSCS protection sits quietly behind the scenes — until the day it matters most. When a bank, insurer, or investment provider fails, it can mean the difference between financial disaster and full recovery.
The Financial Services Compensation Scheme (FSCS) is the UK's statutory safety net for customers of authorised financial firms. It protects your savings, pensions, insurance policies, and investments when a regulated provider collapses and can't return your money.
Understanding FSCS protection isn't just about peace of mind — it's a practical step toward safeguarding your financial future. From staying within deposit limits to checking firm authorisation, this guide helps you make confident, informed decisions.
•
Protects against firm failure:
Up to £85,000 of savings per firm, plus tailored protection for pensions, annuities, investments, and insurance claims.
•
Automatic compensation:
For most deposit claims, FSCS pays out within 7 working days — no claim form required.
•
Builds confidence in your plan:
Knowing how the FSCS works helps you structure your finances more safely and avoid costly exposure.
Savings protection is capped at £85,000 per person, per authorised firm — not per account or brand.
•
Brand confusion is common:
Many banks share licences. Holding accounts across brands may not increase your protection.
•
Not all losses are covered:
FSCS doesn't cover market losses or crypto. Protection only applies to firm failure or bad advice from failed providers.
1. What is the FSCS?
The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation fund of last resort for customers of
certain authorised financial firms
Firms must be authorised by the FCA or PRA and be carrying out a regulated activity that is covered by the FSCS.
. It exists to protect consumers when banks, insurers, investment firms, or other regulated providers fail and are unable to meet their obligations.
The scheme was established in 2001 under the Financial Services and Markets Act and is funded by a levy on the financial services industry. It covers a wide range of financial products — from current accounts and savings to pensions, mortgages, and investments — and pays compensation when a regulated firm goes out of business.
The FSCS forms a vital part of the UK's financial safety net. It is designed to maintain confidence in the financial system, prevent consumer panic, and ensure that individuals are not left financially exposed when authorised firms collapse.
2. What does the FSCS cover?
The FSCS covers a broad range of financial products, provided by firms that are authorised by the FCA or PRA and are carrying out FSCS-eligible activities. If a regulated firm fails and can't return your money, the FSCS may step in to compensate you.
Key areas of protection include:
-
Savings and current accounts: - Includes personal and joint accounts, fixed-term savings, and cash ISAs, up to the
deposit limit
Currently £85,000 per person, per authorised firm. Joint accounts are covered up to £170,000.
.
-
Insurance policies: - Covers general insurance like home, car, travel, and some life insurance if the provider cannot pay claims.
-
Investments and investment platforms: - Covers financial loss resulting from poor advice or the failure of an authorised investment provider.
-
Pensions and retirement income: - Includes some personal pensions, SIPPs, and annuities, depending on the
product structure and firm status
Only FSCS-eligible regulated firms and pension products are covered — for example, pensions with safeguarded benefits or annuities from PRA-regulated insurers.
.
-
Mortgage advice: - If you suffer financial loss from negligent advice by a failed mortgage broker or adviser.
3. What doesn't it cover?
While the FSCS provides broad protection, there are important limits and exclusions. It only applies to authorised
Firms must be regulated by the FCA or PRA to be considered ‘authorised' for FSCS protection.
firms and eligible products. If your money is with an unregulated provider or exceeds the compensation limits, you may not be covered.
The FSCS does not cover:
-
Cryptoassets: - Cryptocurrencies like Bitcoin and Ethereum are not regulated by the FCA and are not protected by the FSCS.
-
Unregulated firms: - If the provider is not authorised
Firms must be regulated by the FCA or PRA to be considered ‘authorised' for FSCS protection.
by the FCA or PRA, you have no recourse under the FSCS.
-
Losses due to poor market performance: - FSCS does not compensate for market losses — only for firm failure or bad advice by a failed adviser.
-
Deposits over the deposit limit: - You're only protected up to £85,000 per person, per authorised firm. Joint accounts are covered up to £170,000. Anything above this could be lost if the bank fails.
-
Foreign currency accounts held abroad: - Accounts held outside the UK, even in UK-based currencies, are not protected by the FSCS.
4. How much protection do you get?
FSCS compensation limits vary depending on the product type and circumstances. The standard limit is £85,000 per person, per authorised firm, for deposits. Other financial products have different caps — and in some situations, such as temporary high balances, protection can exceed this amount.
Here's a breakdown of the current FSCS limits:
-
Cash savings and current accounts: - Up to £85,000 per person, per authorised firm. Joint accounts are covered up to £170,000 in total, shared equally unless otherwise agreed.
-
Temporary high balances: - Up to £1 million for up to 6 months, for qualifying life events such as property sales, divorce settlements, redundancy payments, or insurance claims.
-
Insurance claims: - 90% of the claim value with no upper limit for most types of general insurance. Some compulsory insurance policies, such as third-party motor insurance, are protected in full.
-
Investment losses due to firm failure: - Up to £85,000 per person, per firm, if the loss results from bad advice, mis-selling, or the collapse of an FSCS-authorised investment firm.
-
Pensions and retirement income: - Up to £85,000 if you lose money due to a failed SIPP provider or bad advice from an authorised adviser. Market losses are not covered.
FSCS protection for cash deposits and investment products is applied separately.
For example, if you hold £85,000 in a savings account and £85,000 in investments with the same bank,
both are covered up to their respective limits.
5. Who qualifies for FSCS protection?
FSCS protection is available to most individuals and some small businesses, as long as the product is eligible and the firm is authorised by the FCA or PRA. However, there are important criteria and limitations.
You'll usually qualify if:
-
You're a UK resident using a regulated UK firm: - Most personal accounts, pensions, and policies with authorised providers are protected automatically.
-
You're an SME, charity, or trust: - Some business and charity accounts are covered, but there may be extra conditions.
-
The firm is FCA or PRA authorised: - You must use a firm that is fully regulated to be eligible for FSCS protection.
-
The product is within FSCS scope: - Protection only applies to specific types of loss, such as firm failure, mis-selling, or unpaid insurance claims — not general investment performance.
Non-UK residents, large corporates, and people using unauthorised firms may not be covered. Always check a firm's authorisation on the FCA Register and review the specific FSCS rules for your product type.
6. Savings across multiple banks
FSCS protection is capped at £85,000 per person, per authorised firm — not per account or banking brand. To maximise your protection, you can spread savings across different banks, but only if those banks are separately authorised.
Some banks share the same banking licence. For example, First Direct and HSBC are both part of HSBC UK Bank plc. If you hold £60,000 in First Direct and £60,000 in HSBC, only £85,000 is protected — not £120,000.
To check which banks share licences, use the
FCA Register
or the FSCS's list of
authorised firms.
Use our FSCS protection calculator below to get a quick overview of how much of your total savings are covered.
For a more detailed breakdown with multiple accounts and scenarios, visit our
standalone FSCS calculator.
Select your banks and enter your balances to check how much of your money is protected under the £85,000 FSCS limit.
7. What happens if a firm fails?
If a regulated financial firm collapses, the FSCS may step in to protect customers. The process depends on the type of product, but in many cases, compensation is automatic and does not require you to submit a claim.
Here's what typically happens:
-
The firm is declared in default: - FSCS investigates and confirms that the firm can't meet its financial obligations.
-
FSCS identifies eligible customers: - It checks who held money or had valid claims at the time the firm failed.
-
Compensation is calculated: - FSCS reviews balances, product types, and limits to determine how much can be paid.
-
Automatic payment (in most cases): - For savings accounts and cash ISAs, FSCS usually pays eligible customers directly within 7 working days.
-
Manual claims for complex products: - For pensions, investments or insurance policies, you may need to provide additional information and complete a claim form.
8. FSCS in action: common examples
To help make the rules clearer, here are some real-world examples of how FSCS protection applies in practice:
-
You hold £60,000 in a single savings account: - You're fully protected. If the bank fails, FSCS will pay you the full amount automatically.
-
You hold £100,000 across two accounts with the same banking licence: - Only £85,000 is protected. The rest is at risk unless you qualify for temporary high balance protection.
-
You hold £50,000 with Bank A and £50,000 with Bank B: - If the banks are separately authorised, you're protected up to £85,000 with each — so your full £100,000 is covered.
-
You get poor pension advice and the firm fails: - FSCS may pay up to £85,000 in compensation for unsuitable advice from a failed firm.
-
You hold £85,000 in savings and £85,000 in investments with the same bank: - Both amounts are fully protected because deposit protection and investment protection are separate FSCS categories.
-
You have a mortgage and £85,000 in savings with the same bank: - Your mortgage debt does not reduce the FSCS protection on your savings. You are still covered for the full £85,000.
-
You buy crypto through an unregulated platform: - No protection. FSCS does not cover cryptoassets or unauthorised firms.
9. Why FSCS protection matters
FSCS protection gives savers and investors confidence that their money is safe, even if the worst happens. It plays a vital role in maintaining trust in the UK's financial system.
Understanding how the limits work — and spreading your money across different firms where needed — can reduce your risk of losing money if a provider fails.
While FSCS is a last resort, it can make the difference between financial recovery and unrecoverable loss in a crisis.
10. How to check if you're covered
To confirm whether your savings, pensions, or investments are protected by the FSCS, you need to check both the status of the financial firm and the type of product you hold.
-
Check the FCA or PRA Register: - Use the
FCA Register to confirm the firm is authorised and eligible for FSCS protection.
-
Look for shared licences: - Some banking brands share the same licence. Check the
FSCS checker to see if your accounts are grouped under one £85,000 limit.
-
Confirm product eligibility: - FSCS only protects certain regulated products, such as deposits, investments, pensions, and insurance policies.
-
Check your total balances: - Ensure your combined savings with any one firm don’t exceed the £85,000 protection limit (£170,000 for joint accounts).
OPTIMLY INSIGHT
The FSCS website offers a simple online checker to verify if your provider and product are covered. It’s the quickest way to avoid confusion about brand names and shared licences.
Always double-check your provider’s status before opening new accounts — especially with lesser-known banks or online-only brands.