Financial Services Compensation Scheme
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The Financial Services Compensation Scheme (FSCS) is a statutory compensation scheme in the UK that provides protection and compensation to customers of financial services firms that are authorised by the Financial Conduct Authority and the Prudential Regulation Authority. The scheme is designed to ensure that customers have access to compensation in case a financial firm fails or is unable to meet its financial obligations.
Scope of coverage: The FSCS covers various financial products and services, including deposits, investments, insurance policies, mortgage advice, and certain types of consumer credit. It provides protection to eligible individuals and small businesses.
Compensation limits: The FSCS sets compensation limits that determine the maximum amount of compensation a customer can receive for a specific claim. The limits vary depending on the type of financial product or service. For instance, the deposit compensation limit is £85,000 per person, per authorised institution (or £170,000 for joint accounts).
Insolvency of firms: The FSCS comes into play when a financial services firm fails or becomes insolvent and is unable to meet its financial obligations. In such cases, eligible customers can make a claim to the FSCS for compensation.
Eligibility criteria: To be eligible for compensation, individuals and small businesses must meet certain criteria. The FSCS has specific rules regarding eligibility, such as residency requirements and the classification of business customers as eligible claimants.
Claims process: Customers who believe they are eligible for compensation under the FSCS can make a claim directly to the scheme. The FSCS assesses the validity of the claim and, if approved, makes arrangements to compensate the customer within certain timeframes.
Funding: The FSCS is funded through levies imposed on financial services firms that are authorised by the Financial Conduct Authority and Prudential Regulation Authority. Firms contribute to the compensation fund based on their size and the nature of their business activities.
It is important to note that the FSCS has certain limitations, exclusions, and conditions. It is advisable to refer to the official FSCS website or consult with financial advisors or legal professionals for specific details and guidance regarding eligibility, compensation limits, and the claims process.
Scope of coverage: The FSCS covers various financial products and services, including deposits, investments, insurance policies, mortgage advice, and certain types of consumer credit. It provides protection to eligible individuals and small businesses.
Compensation limits: The FSCS sets compensation limits that determine the maximum amount of compensation a customer can receive for a specific claim. The limits vary depending on the type of financial product or service. For instance, the deposit compensation limit is £85,000 per person, per authorised institution (or £170,000 for joint accounts).
Insolvency of firms: The FSCS comes into play when a financial services firm fails or becomes insolvent and is unable to meet its financial obligations. In such cases, eligible customers can make a claim to the FSCS for compensation.
Eligibility criteria: To be eligible for compensation, individuals and small businesses must meet certain criteria. The FSCS has specific rules regarding eligibility, such as residency requirements and the classification of business customers as eligible claimants.
Claims process: Customers who believe they are eligible for compensation under the FSCS can make a claim directly to the scheme. The FSCS assesses the validity of the claim and, if approved, makes arrangements to compensate the customer within certain timeframes.
Funding: The FSCS is funded through levies imposed on financial services firms that are authorised by the Financial Conduct Authority and Prudential Regulation Authority. Firms contribute to the compensation fund based on their size and the nature of their business activities.
It is important to note that the FSCS has certain limitations, exclusions, and conditions. It is advisable to refer to the official FSCS website or consult with financial advisors or legal professionals for specific details and guidance regarding eligibility, compensation limits, and the claims process.
