£271m paid out by financial protection scheme in past year

Protect pound

Some 46,000 people were paid a combined £271 million by the Financial Services Compensation Scheme (FSCS) in 2015/16, after firms failed or stopped in trading.

This equates to an average of £740,000 a day. Compensation was paid across a range of financial services:

  • Almost £88 million was paid to customers of firms providing general insurance – such as motor and employers’ liability insurance;
  • Claims against the life and pensions advice sector led to a compensation bill of just less than £84 million, up from £35 million the previous year – largely because the average payout against advisers who recommended high-risk investments to hold in self-invested-personal pensions (SIPPs), has risen year-on-year from £29,500 to £38,600.
  • £77 million was paid out to people with claims against financial advisers that stopped trading.


The FSCS is an independent body, which was set up in 2000 to pay compensation if a firm is unable, or likely to be unable, to pay claims against it. It’s funded by a levy on authorised financial services firms - individual customers aren’t charged to use the service.

In the past 15 years, the FSCS has paid out more than £26 billion in compensation to over 4.5 million people.


How your money is protected

If you deposit up to £75,000 in a UK bank, building society or credit union, the FSCS effectively insures you against the bank going bust. Crucially, the protection applies to each bank you have an account with, not to each person, or to each bank account. This means if you have more than £75,000, you can split savings between two or more banks to make sure it’s all covered. For couples, it also means they can put £75,000 each into a joint account and the full £150,000 will be protected.

But if an individual splits £100,000 between two accounts in the same bank, or even two brands operating on the same banking licence, say RBS and NatWest, or Yorkshire Bank and Clydesdale Bank, then £25,000 would fall outside the protection of the FSCS.


Other key products the FSCS protects include:

  • Up to £50,000 worth of investments per person per firm.
  • Up to £50,000 per person per firm to cover mortgage advice and arranging.
  • 90% to 100% of the cost of insurers failing – depending on the type of insurance. 


Mark Neale, FSCS chief executive, says: “FSCS protection remains the same, following the EU referendum result, so does our aim to provide a trusted compensation service for customers that raises public confidence in the financial services industry. This is important because wider financial stability depends on FSCS performing effectively.”

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