What's the FSCS, and how does it work?

The FSCS Explained: What's the Financial Services Compensation Scheme, and how does it work?

The Financial Services Compensation Scheme (FSCS) is a scheme that protects your money if your bank or a financial company goes bust. It was set up in 2001 under the Financial Services Firms & Markets Act 2000 & protected deposits of £75,000 or less. This article will go into more detail about how the FSCS works so you can make an informed choice when choosing where to deposit your hard-earned cash!
What’s the Fscs, and How Does It Work

What Level of Protection Does the FSCS Offer for Pensions?

The FSCS 1 will protect your pension when it is with a bank, building society, or credit union. It only covers about £50,000 of the value, and there’s no protection for any funds over that amount.

There are three levels: basic level (£75,000), standard level (advanced) (£200,00), and enhanced level (£500,000). These offer varying degrees of protection, but you can’t choose which one to have, just like how you can’t choose what type of car insurance company coverage you want – it all depends on where your money is deposited. If you deposit more than £75k in savings at HSBC, then you are automatically covered by the basic level.

The FSCS offers protection for deposits to banks, building societies, and credit unions of up to £75k (basic level).

And if that’s not enough,

If your savings balance is over this amount, you need to make sure you’re protected with an extra insurance product such as a bank account or pension policy that may cover more than just £75k. These policies will vary in terms of their premiums and benefits, so it’s important to do your research before deciding what type of coverage suits you best.

FSCS Limitations

FSCS Limitations

The FSCS may not cover you if your bank is on the blacklist, insolvent or bankrupt. The FSCS will never pay out more than £75k for each customer, and it also won’t protect deposits held with different institutions unless they’re under one ownership – such as a group of branches owned by Barclays Bank plc.

It helps to be aware of what types of risks can happen: fraud, internet banking, scams, etc., But there is always no guarantee against all these unforeseen events.

FSCS protection covers up to £35m per UK institution (this is the limit) and up to £85,000 for each customer in an eligible institution (up to a maximum of £170,000).


Most people want protection against fraud as well, so it’s worth checking your policy on this when you open an account with a bank or building society that offers insurance. If not, then you might need one separately once the financial limits have been reached – this will cost more, but some policies include cover in addition to what the FSCS provides.

If you’re thinking about opening an account, please make sure that your provider has passed its testing by the regulator – which means it should be financially sound and trustworthy before taking out anything from it.

The FSCS regulates the UK’s financial services industry and protects consumers by putting rules that firms must follow when selling their products and offering advice.

Savings Protection

Savings Protection

When you put your money in a bank or building society, it is protected up to £75,000 under the Financial Services Compensation Scheme (FSCS). The limit rises to £150k if the institution has more than one branch.

If your savings go above this level, for example, because of an inheritance, then you may want

to consider taking out additional protection from another provider- such as life insurance. It’s worth checking with other providers whether they provide coverage over and above what the FSCS offers.

On the other hand,

One thing that can be overlooked when depositing funds into a new account is how long it takes for these funds to become accessible again after being deposited. Remember that the FSCS is an excellent way to protect your savings and help you get back some of what you have saved if things go wrong with your bank.

Depositor Protection

Depositor Protection

Is there to make sure that you will be repaid in the event of banks and building societies failing. The limit is £85,000 per person per institution – which can mean a total of up to £170,000 for couples combined. But this only applies if your account was with an authorized UK bank or approved savings provider when it went bust.

It’s important to remember that not all financial services providers are covered by the FSCS protection scheme, so find out before taking any risks!

Here’s the truth:

Since its inception in 2001 following the collapse of Equitable Life Assurance Society Ltd2., millions of individuals have had their deposits protected because they could rely on compensation from the Financial Services Compensation Scheme (FSCS). This means that customers of authorized financial firm institutions such as banks and building societies are protected by the FSCS up to £85,000 per person.

Compensation Limit

Compensation Limit

In most cases, if your bank goes bust and you lose everything in your savings account, then you will be compensated by the first level of protection up to £75k.

However, this is not necessarily true for all types of accounts:

If you have a joint account (like an ISA) with someone else who has more than £150k sitting there, too, it may only cover the basic limit – so make sure that they choose something better!

You see:

If you’ve already got over £75k deposited at Barclays, then their insurance company policy won’t protect anything above this amount. You would need to find another type of coverage from elsewhere, such as a pension or investment product. It’s worth double- is provided by the Financial Services Compensation Scheme (FSCS), which looks after deposits made to the UK authorized banks, building societies, and credit unions.

The FSCS will pay a maximum of £75,000 per person for each bank or building society that goes bust; this limit also applies if your account is with one company, but it has more than one branch.

This means that in most cases, savers are covered up to £150k (£75k x two) as long as they don’t hold their savings at multiple institutions- so make sure you take out additional protection from another provider if necessary.

Banking Brands and Building Society Brands

Banking Brands and Building Society Brands that Share FSCS Protection

If you are a Nationwide customer, then your savings are protected by the FSCS. If you bank with First Director M & M&S Bank and use an HSBC cash card to withdraw money from ATMs, this is covered. This means that depositors at these brands will be eligible for up to £85000 of protection under the FSCS in each account type (savings/current).

Banks owned by Lloyds Banking Group- including Halifax and Lloyds- have been added recently, giving their customers access to the same level of coverage. Customers who do not hold accounts with any of these providers may wish to consider looking into taking out life insurance cover instead.

It’s worth remembering that the FSCS is not just there to protect what you have in your savings account. This ‘backup fund’ will also cover you if anything happens to your share portfolio, investment bonds, or life insurance policies.

If this isn’t enough protection for you and you don’t want any risk of losing money, then we suggest that it’s worth looking at taking out a plan which would help ensure all of your assets are protected should something happen- like term assurance.

Got Questions? Check These First

How does the FSCS protect a person?

What's the purpose of the FSCS?

Who is covered by FSCS?

How does an individual use the FSCS?

In conclusion

Let’s recap,

FSCS is a regulatory body for the UK’s financial services. It regulates how banks, insurers, and other providers of financial products and services operate to protect consumers. FSCS also protects from personal insolvency, which can happen when someone goes bankrupt or loses all their money through investment fraud.


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