FSCS unveils higher protection limits for a range of services

The UK Financial Services Compensation Scheme (FSCS) has earlier today announced the coming into force of new compensation limits. These limits have been raised to £85,000 for more of the financial products the scheme covers. 

As well as protecting deposits up to £85,000 in banks, building societies and credit unions, the higher FSCS limits cover investments, mortgage advice, life and pensions advice, debt management and long-term care insurance.

Below is a list of products to which the new limits apply:

• Investment provision is now £85,000 per person per firm, up from £50,000.

• Investment intermediation is now £85,000 per person per firm, up from £50,000.

• Home finance intermediation is now £85,000 per person per firm, up from £50,000.

• Life and pensions intermediation is now £85,000 per person per firm, up from £50,000.

• Debt management is now £85,000 per person per firm, up from £50,000.

• Long-term care insurance is now 100% of the claim per person per firm, up from £50,000.

Customers of firms that are declared to have failed (in default) before April 1, 2019 will be covered up to the previous £50,000 limits. The new limits apply to claims against firms that fail on or after April 1, 2019.

In March 2019, the FSCS published data revealing FSCS recovered just under £300 million over the past five years (that is, from FY 2014/15 to FY 2018/19 year to date) from failed financial services firms. FSCS also noted that it had recovered billions of pounds following the resolutions of the 2008 banking failures, where FSCS needed to take out loans totalling approximately £20 billion from the Government at the time of the financial crisis. Those loans have now been repaid in full, largely through FSCS’s recoveries work.