FSCS: How you're protected on savings, insurance & investments
The Financial Services Compensation Scheme (FSCS) doesn't just protect your savings. If you've an insurance, investment or pension product with a regulated company that's gone out of business, you may also have FSCS protection. It could prevent you from being left £1,000s or even £10,000s out of pocket – even if the company went bust decades ago.
The FSCS is an independent organisation set up by government, and funded by the industry, to act as a safety net. Essentially, it was set up to help you get your money back if your financial services supplier goes bust. It's a free service so you won't have to pay any fees if you claim directly through it.
This guide is about helping you understand how your money is protected when it's held in insurance and investment products.
We've also got a guide that explains how your money's protected by the FSCS when held in a current account or savings account. These accounts are generally protected up to £85,000.
For full details and to check if your bank is protected by the FSCS, see Are my savings safe?
Am I protected if my insurance provider goes bust?
Any insurance policy you take out – whether it be home, car, travel, life or another type – will be FSCS protected as long as the provider was regulated by the Prudential Regulation Authority (PRA) at the time it went bust.
If your policy provider goes out of business, the first step is to check whether it's regulated by the PRA.
In the extremely unlikely event your insurer is not regulated, and you're therefore not covered by FSCS protection, you won't get any money back and you would need to arrange new cover. But if it is, the FSCS can help.
If you HADN'T started a claim...
If your insurer was PRA regulated when it went bust and you didn't have a claim underway, the FSCS will protect you in one of two ways:
1. Your insurance will be taken over by another insurer at no cost to you. The FSCS's main objective is to 'maintain continuity', so in the first instance it'll try to find another provider to take over your policy – with an 'opt-out' option if you are not satisfied with the arrangement.
How long this takes will vary depending on how quickly a replacement insurer is found, how many customers need to be moved across and how complex the policies are.
You'll continue to be covered while this process is ongoing (unless you're informed otherwise by the insurer or their insolvency practitioner). This means your policy will still be valid and claims against it will generally proceed as they would have done had the insurer still been in business.
2. Your insurance premium will be partially or fully refunded. If the FSCS can't find cover with another insurer, or if you're not satisfied with its arrangement, it'll look at returning the remainder of the premium, which you can use to buy new cover of your choosing.
Whether you get a full or partial refund depends on the insurance type:
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For policies such as third-party car insurance, which you are required by law to have, you should get 100% of your remaining premium refunded as long as it meets the policy's eligibility criteria.
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Non-compulsory policies (such as home, travel, life and PPI cover) have cover for 90% of the remaining premium.
The court-appointed insolvency practitioner determines the amount of the policy premium refund, which is generally less than the initial cost of the insurance policy. This is because:
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The overall cost of the insurance at the time of buying can include other fees, such as administration costs – and the FSCS can only protect the insurance premium portion of the policy.
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The policy premium refund reflects how much time was left on the policy.
So, for example, if you paid £1,000 for a car insurance policy and the insurer went bust after six months, you would be entitled to a refund of around £500 (perhaps slightly less to take into account any fees as explained above).
The FSCS says each insurance compensation claim is quite unique so it could take as little as three months to pay out, or up to six.
If you HAD started a claim...
If you'd started a claim with your old insurer, your policy is likely to still be valid, and claims against your policy would usually go ahead as if you'd made a claim with your original insurer. You'll need to contact the claims-handling company or agent that you were dealing with before your insurer went out of business.
If in doubt, you can check the insurer's website for details of how to claim, or how to get an update on an existing claim – which should have been updated by the insolvency practitioner to ensure the right contact details are available. Often these are the same phone numbers and email addresses as before, but if not, you can use the details on your existing policy paperwork.
If the insurer has been declared in default by the FSCS, you can also search for the firm on the FSCS website to see if there have been any updates, using the search box that is located at the top of any page.
Am I protected if my investment company goes bust?
FSCS protection for investments kicks in if you lose money due to the provider of the investment product going bust. For example, if you've got a stocks & shares ISA with a bank, and the bank goes bust.
Crucially, FSCS protection does NOT cover you if your underlying investment goes bust.
In other words, if you've got shares in a company and it goes kaput, or you've bought a fund and it performs poorly, generally there's no safety net to fall back on – that's the nature of investing.
If you're buying shares or funds through a company – for example, where a broker has simply sold you shares – the fact the company went bust often wouldn't cause you to lose out, as you'd still own the shares. However, sometimes the FSCS is able to help in these cases by covering the costs of transferring money or assets to a new broker or platform.
But generally the FSCS only protects you if you've lost out financially as a result of the company providing your investment product going bust. And the protection only applies if the product provider or adviser was authorised by the Prudential Regulation Authority (PRA) or Financial Conduct Authority (FCA), otherwise you won't be able to make a claim. If you're unsure if your investment is protected, use the FSCS investment protection checker.
If you've put cash into an investment fund, you'll get 100% of the first £85,000 back – as long as the firm failed after 1 April 2019. For older claims, see below:
Date firm failed | Amount of compensation/protection |
|---|---|
After 1 April 2019 | £85,000 per eligible person, per claim. |
1 January 2010 to 31 March 2019 | Up to £50,000 per eligible person, per firm. |
Before 1 January 2010 | 100% of the first £30,000 and 90% of the next £20,000, up to £48,000 per eligible person, per firm. |
Claims for bad advice
If your claim is about bad advice which caused you to lose money, the advice must have been given to you on or after 28 August 1988 – if it's before this date, there was no investor compensation scheme in the UK, so you can't claim. For more on how to claim, see the claims section.
In order to claim for bad advice, the adviser/firm you received the advice from has to be authorised by the FCA.
If the firm is still in business and you believe you received bad advice, initially you would need to complain to the adviser directly – escalating any complaint to the Financial Ombudsman Service (FOS) if you still aren't happy.
If the firm/adviser goes out of business, that's when you would need to make a claim with the FSCS, as you can no longer pursue it with the firm itself. It would look at the circumstances and any evidence available – for example, paperwork that shows the firm/adviser in question did actually advise you, and transaction histories to show the value of your investments. It will be looking for proof that the advice you were given was negligent.
Am I protected if my pension provider goes bust?
If you have a pension (or you were advised to get a pension) and the provider or adviser has gone out of business, you may be able to claim compensation with the FSCS.
Pensions are notoriously complicated, but the FSCS has built a tool so you can check what it protects. Where it can't give a definite answer, it provides some questions for you to ask your pension provider, so you can find out if you're protected by the FSCS.
Pension provider goes out of business: 100% of your claim
Generally speaking, the FSCS can protect pensions that are provided by UK-regulated insurers. Where it can pay compensation, it will cover the pension at 100% with no upper cap. Pensions covered in this way include:
Annuities – where you exchange the cash in your pension for a regular income from an insurance company.
Personal pensions – these are set up yourself by contacting a pension provider. The amount you'll get back depends on how much has been paid in, how your investments have performed, and any charges taken.
Stakeholder pensions – these may be offered by your employer, or you can set one up yourself. They often have flexible, minimum contributions and don't require you to make any investment decisions if you don't want to.
However, Self-Invested Personal Pensions (SIPPs), which are DIY personal pension that let you choose your own investments, aren't treated in the same way. Here, where the FSCS can pay compensation, it will normally cover the pension at 100% with an upper cap of £85,000.
The FSCS can't protect occupational pension schemes (OPS) if they fail. These may be protected by the Pension Protection Fund (PPF). If you're not sure what sort of pension you have, then you can check with your employer or pension provider.
Bad pension advice: protected up to £85,000
If a UK-regulated adviser has given bad advice concerning a pension (for example, advising you to transfer it when you would be better off keeping it where it is), if they are still in business you will need to complain to the Financial Ombudsman Service. If in doubt, it's best to seek guidance from an independent financial adviser before moving your pension.
The adviser must have gone out of business for the FSCS to help. It also must have been regulated by the Financial Conduct Authority (FCA) at the time it gave the advice. The FSCS may be able to pay compensation up to £85,000. For more on how to claim, see the claims section.
Other ways the FSCS can protect you
The FSCS can protect you in various other financial areas. Below is an overview of some of the other ways it can help – with links for more info and support.
Debt-management firm fails: get up to £85,000
A debt-management plan is an agreement where you make regular payments to a licensed debt management company. The company then shares this money out between your creditors – there are no courts involved with this.
If you've got money in a debt-management plan run by a specialist debt management firm that's gone bust, the FSCS may be able to pay you compensation. For example, you might have been paying them a lump sum each month that they should have passed on to the people you owe money to. If that didn't happen, the FSCS can return that money to you.
How much you get will depend on when the firm failed:
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If the firm failed after 1 April 2019 – up to £85,000 per eligible person, per firm. You don't need to do anything as the FSCS will compensate you automatically.
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If it failed between 1 April 2018 and 31 March 2019 – up to £50,000 per eligible person, per firm.
For more info on debt, see our Debt problems guide, and for more on debt management firm failures, see the FSCS website.
Funeral plan provider goes out of business: get alternative cover or compensation
If the provider of your funeral plan went out of business on or after 29 July 2022, you may be FSCS protected. This includes funeral plans bought before this date (before the industry was regulated). Your funeral plan provider must be regulated by the Financial Conduct Authority (FCA).
If your funeral plan provider goes out of business, it should have arrangements in place to ensure that a new regulated provider can carry out your funeral plan. Alternatively, it may provide you with compensation.
If these arrangements aren't in place, the FSCS will protect plan holders of authorised funeral plan providers that have failed.
It can help you find a replacement funeral plan, or pay compensation up to £85,000 per eligible person, per firm.
If you choose to receive compensation, the FSCS will calculate the amount by reference to what it would cost to buy the same plan on today's market.
For more on funeral plans, see our Prepaid funeral plans guide, check on the Financial Services Register to see if your provider is FCA registered, and for info on what you're covered for and how to claim, see the FSCS website.
Bad mortgage advice: get up to £85,000
If you received bad mortgage advice that caused you to lose money, or you were previously mis-sold a mortgage endowment (a type of interest-only mortgage not commonly used now), you may be able to claim compensation from the FSCS. In all cases, the firm, broker or adviser you dealt with must have failed for it to be able to help.
What you get depends on when the firm failed:
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If the firm/adviser failed after 1 April 2019 – up to £85,000 per eligible person, per firm.
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If it failed between 1 January 2010 to 31 March 2019 – up to £50,000 per eligible person, per firm.
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If it failed before 1 January 2010 – 100% of the first £30,000 and 90% of the next £20,000, up to £48,000 per eligible person, per firm.
For full information and to check if you can claim, see the FSCS website.
Do I need to make an FSCS claim?
If your claim relates to a failed insurance company, the FSCS will try to arrange suitable replacement cover or refund you the remainder of your policy premium. So you shouldn't need to do anything.
But, generally speaking, you won't automatically get compensation if your claim relates to pensions or investments. You'll need to actively make a claim with the FSCS.
Whenever there's a claim to be made, there's usually a claims management company sniffing around. But beware, these will cost you money, you're much better making the claim direct with the FSCS.
Claiming online is quick and you can nominate someone to help you if needed
The FSCS has made it easy for you to claim online. It says it takes between one and two hours to complete an online application, and that you can save your progress and return at any point. Below are the three steps you'll follow:
You'll first provide some basic details and it will tell you straightaway whether you're eligible to claim.
If you're able to make a claim, you can set up an online account, which will make it easier to track the progress of your claim.
Finally, you'll answer questions about why you're claiming, upload your supporting documentation and sign your claim electronically before submitting it.
If you struggle with forms, there's no need to use the help of a solicitor or claims management company that will charge you a lot of money. The FSCS allows you to use a friend or family member as a 'personal representative' – who can be used as your point of contact. For more, see the FSCS website.
Get your supporting documents ready before you start your claim
You'll need to provide supporting documents in order for your claim to be investigated – it might be easier to gather these first so you can upload them when you submit your claim. What documents you need will depend on what you're claiming for.
For example, if you're claiming for general insurance, you will need to provide:
Policy document with terms and conditions.
Proof of any claims made.
Proof of premiums paid.
Proof the firm gave you advice.
A full list of supporting documents needed, template letters and how to claim can be found on the FSCS website.
FAQs
Bail-outs and bail-ins are both measures to help failing banks. But whereas a bail-out involves governments (and therefore taxpayers) giving banks emergency funding, bail-ins are when the emergency funding is obtained by forcing losses on the banks' creditors and shareholders.
This has led to the misconception that banks could take your money out of a savings account if it needed emergency funding – and you wouldn't be entitled to any protection. But this is NOT the case. FSCS protection applies to bail-ins, so even if that were to happen, you would be protected for up to £85,000 if eligible.
The FCA is the Financial Conduct Authority – it sets and manages the rules of conduct for around 51,000 financial services firms in the UK.
The FOS is the Financial Ombudsman Service – a free dispute resolution service, which can order firms to pay you compensation if they don't provide the service you paid for. Read our Financial Ombudsman guide to find out how it works and how to make a claim.
The FSCS is the Financial Services Compensation Scheme – it will pay out compensation if a business is unable to.
Yes. You'll need a grant of probate/letter of administration and the deceased's will (if there is one) or confirmation that there wasn't either of these. Check if you can start a claim.
You may be able to make a claim against an investment firm as far back as September 1988, and for insurance intermediaries, as far back as January 2005.
Is my money protected in the event of a bail-in?
What's the difference between FSCS, FCA and FOS?
Can I claim on behalf of someone who has died?
How far back can I complain?
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