Financial Services Compensation Scheme (FSCS)
A guide to the FSCS
Established in 2001 under the Financial Services and Markets Act 2000, the FSCS (Financial Services Compensation Scheme) is a UK based compensation fund which pays compensation to customers of authorised financial companies where the firms are unable to do so.
How does the FSCS work?
The FSCS is a last resort option for those seeking financial recompense from members of the financial sector. They work independently from the government to review cases on an individual basis, paying compensation to accepted parties where claimants are eligible for any finance taken out after the 14th February 2005.
Products including insurance policies, financial deposits, home finances and investments are all covered under the scheme. The FCA ruled that they can only refund a maximum of 90% compensation.
When does the FSCS make payments?
Payments are made when the financial firm is unable to do so. This will usually be because they have entered administration, have stopped trading or are said to be ‘in default’ – a term the FSCS assigns to companies it feels are unable or unlikely to be able to pay claims.
Are there any charges for using the FSCS?
No, consumers are not charged for using their services.
How does the FSCS relate to you?
If you are in the process of lodging a PPI reclaim then you may be dealing with transactions which occurred some years ago. This means that the lender whom you obtained the policy from may not be in business any longer – something which could impact your ability to receive compensation.
The FSCS are designed to help in situations such as this and can help you receive the compensation you deserve from your PPI claim, even if your bank or lender is no longer trading.