The Financial Services Compensation Scheme (FSCS) is a regulatory body established in order to protect consumers in the financial services industry in the United Kingdom. It is an independent agency that provides compensation to customers of failed financial institutions when their deposits or investments are unable to be repaid.
FSCS primarily covers banks, building societies, credit unions, and insurance companies. In case of a bank or financial institution failure, FSCS steps in to compensate eligible customers up to a certain limit. The scheme ensures that individuals who have deposited money with a financial institution are protected even if the firm cannot meet its obligations.
In terms of deposit protection, the FSCS currently secures deposits up to £85,000 per person, per authorized bank. This means that if a bank where an individual has deposited money goes bankrupt, the FSCS will provide compensation for the amount lost, up to the specified limit.
Additionally, the FSCS also offers protection to customers who have invested in certain financial products such as stocks, bonds, pensions, and insurance products. However, the compensation limits for different investment products may vary.
Overall, the Financial Services Compensation Scheme (FSCS) serves as a safety net for consumers, providing them with a level of confidence and security in the financial services industry by guaranteeing compensation in the event of a failure of an authorized firm.
