Will the Financial Services Compensation Scheme protect my savings?

15 February 2016

I’m worried that the total is above the £75,000 covered under the Financial Services Compensation Scheme (FSCS). I’ve been told that they count as two separate accounts, so I can have up to £75,000 in each. Is that correct?

DM/via email

"The FSCS pays compensation to consumers who suffer a loss when financial services firms, authorised by the Prudential Regulation Authority or Financial Conduct Authority, are declared in default and unable to pay claims against them.

Aviva is a member of the FSCS and so claims against the insurer should be covered by the scheme.

The compensation limits vary depending on the type of financial product you hold. When you refer to £75,000, this relates to the new limit for deposit accounts (reduced from £85,000 from 1 January 2016). This is a limit per person with each deposit-taking organisation. So it wouldn’t matter if you had several accounts with the same bank or building society, what would matter is the total value of those accounts.

This £75,000 limit would apply for cash Isas, but FSCS protection is different for pensions and stocks and shares Isas.

Personal pensions are often thought of as investment products. In reality, if your pension is directly managed by Aviva it is likely to fall under the long-term insurance category. This means that the FSCS would provide protection of 100% of the claim, with no upper limit.

If your pension is invested with third-party investment managers and they are in default, then it could be covered under the investments category instead, in which case the FSCS would provide protection of up to £50,000 per person per firm. You can clarify this with Aviva to see which category your pension sits in.

Stocks and shares Isas would be treated as investments and so the compensation limit of £50,000 per person per firm would apply."

Read our article How stocks and shares Isas work for more info.

Patrick Connolly is a certified financial planner for Chase de Vere.