The three conditions
FSCS sets out that it can pay where an authorised firm has failed and where all of the conditions in its rules are met: the firm must have been authorised, it must have carried out a regulated activity in relation to you, and it must be unable to meet claims against it. Every one of those is a separate hurdle, and failing anyone of them closes the scheme regardless of how strong your complaint would otherwise be.
The limits
For investment claims against a firm that failed after 1 April 2019 the limit is up to £85,000 per eligible person, per firm. For firms that failed between 1 January 2010 and 31 March 2019 it is £50,000 per eligible person, per firm; before 1 January 2010 the scheme paid 100% of the first £30,000 and 90% of the next £20,000, up to £48,000. Note that the separate limit for deposits is not the same as the investment limit, and the two are often confused in reporting.
What FSCS will not do
FSCS cannot accept claims that are only about poor investment performance — the value of investments can go down as well as up. It does not cover unregulated products themselves, which is why so many mini-bond and UCIS investors found the scheme unavailable to them. It also requires that, where a claim is about bad advice, the advice was given on or after 28 August 1988.
How a claim is made
Check the firm first: the FCA Register for its status, and the FSCS list of failed firms for its declarations. Then make the claim on FSCS’s own forms. You are not charged for it, and you do not need to appoint anyone to use it — although a firm may take over the process if you have already instructed one, and their fees come out of what you receive.
- Check the firm’s authorisation and status on the FCA Register
- Check whether the firm is on FSCS’s list of failed firms
- Gather the documents that show what you invested and what you were told
- Submit the claim on FSCS’s forms and keep the reference number
- Tell any other adviser or claims firm you are dealing with, to avoid duplicate work
Where FSCS and the Ombudsman overlap
They are different things, and they are not alternatives you can use twice for the same loss. The Ombudsman deals with complaints against firms that still exist and can pay. FSCS deals with firms that have failed. Where a firm is in default, the practical route is usually FSCS. Where you have accepted an Ombudsman award, FSCS will not also pay out on the same loss.