How can I be sure that my cash is safe?
WE’VE teamed up with the Financial Services Compensation Scheme to answer your questions about ensuring your money is safe.
Q
WHAT is the Financial Services Compensation Scheme (FSCS) and what does it cover?
ATHE
FSCS (fscs.org.uk) protects people’s money when an authorised financial services firm goes bust.
Set up by Parliament, it’s funded by the financial services industry and free to consumers. It covers accounts in banks, building societies and credit unions, insurance policies and pension plans.
The FSCS also covers financial advice or investment products, home finance arranging, and mortgages and debt management advice.
QWHAT
sort of firms does FSCS cover? How can I check my cash is protected?
ATHE
FSCS can cover firms authorised by the
Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) to do business in the UK.
When it comes to banks, building societies and credit unions, check your cash is covered at fscs.org.uk/ check-your-money-isprotected. Check if a firm is authorised on The Financial Conduct Authority’s register at fca.org.uk/register.
The scheme doesn’t cover companies which are still trading, however. That’s when the Financial Ombudsman Service can help at financialombudsman.org.uk
Q
HOW much of my money does the FSCS protect? A
IT COVERS up to £85,000 in most cases, or up to £170,000 for joint accounts.
Some bank brands are part of a larger banking group and you need to be aware that the £85,000 limit is per banking group – ie Lloyds and Halifax are part of the Lloyds Banking Group. You can check this at fscs.org.uk
Q
WHAT if I’ve got a lump sum much bigger than £85,000?
A
THE FSCS protects certain “temporary high balances” up to £1m after certain major life events, such as a house sale, divorce settlement or redundancy payout. Usually this protection lasts up to six months, but the time limit has been extended to 12 months. Q
DOES the FSCS look after pensions too?
A
THE FSCS may be able to protect pensions if:
■ Your pension product provider was an insurer that fails (eg, the company that sold you an annuity);
■ Your pension investment provider fails (eg, the provider of an investment that you hold in your Self Invested Personal Pension), or
■ You got bad advice.
Q
WHAT should I know before buying a financial product or service?
A
IT’S important to know if and how much of your money is protected via the FSCS before buying – just in case something goes wrong.
The FSCS has a list of questions that will help you make more informed choices at fscs.org.uk/questions.