Compensation Fund the FSCS
The FSCS (Financial Services Compensation Scheme) is a compensation scheme and the financial services provided by the British compensation Fund, which provides last resort assistance to customers when a financial company is declared bankrupt and is not able to indemnify their clients. This organization started its activities from December 1, 2001 by an act of the UK government "On the financial services and markets" in 2000. The FSCS is independent from the UK government organization, and service for customers of financial companies is absolutely free. Compensation Fund the FSCS covers all companies approved by the British regulatory authorities the FCA and PRA, and may also be the guarantor of other European companies operating in the UK, but licensed in other governing organizations of their countries.
Subjects of protection of a compensation Fund, the FSCS are:
- insurance policies;
- investments and deposits;
- insurance intermediation (insurance and travel packages);
- investment business;
- housing lending.
To receive compensation from the FSCS can only clients those firms that have been deemed insolvent. For this Compensation, the Fund may hold an independent investigation to rule out possible fraud. Compensation is paid only for the financial loss to private clients and small businesses. The maximum amount of compensation per individual depends on each individual case, but may not exceed 75 000 British pounds for deposits, for firms declared insolvent after 2010, and July 3, 2015 FSCS provides compensation up to 1 million British pounds for short-term large deposits in case of Bank failure.
The maximum compensation for investments is £ 50,000 for a single person. For housing credit applies, the maximum payout is also up to 50,000 pounds. Compensation under the insurance business act without restrictions.
Thus, FSCS Compensation Fund is a guarantee for investors in case a brokerage company will be declared bankrupt and not be able to return funds and securities to its clients, the FSCS compensates losses up to £ 50,000. It should be remembered that the FSCS is not a regulatory organization and not the Committee on disputes, so the FSCS can't send the claim to brokers and to reimburse non-market damages or lost profits. However, if we consider that the FSCS works with such reliable British regulator like FCA, the Compensation Fund is a great addition and serves as a kind of insurance of your funds for force-majeure circumstances.