Q&As about Deposits
What happens if I am a member of a credit union that fails?
How long will it take to process my claim?
If I have more than £85,000 in an account, does that mean I will lose money?
What is the position for people who have multiple accounts with banks that are subsidiaries of another bank?
I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed?
What happens if I owe money to a bank, building society or credit union that fails?
Will you compensate me for any interest I have earned on my account?
Are offshore deposits covered?
Does the Scheme cover deposits made in different currencies?
Are deposits held by nominee companies covered?
Do you cover deposits made through solicitors and other professionals?
Is a business covered if the bank or building society it holds money with fails?
Are pre-paid cards covered by the FSCS?
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What happens if I am a member of a credit union that fails?
If the credit union is authorised by the FSA, your savings are protected by the FSCS, and you may be eligible for compensation.
We will not ask members to complete and return an application form to claim compensation. The account information we receive from the credit union or its administrator will form the basis of an individual's claim.
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How long will it take to process my claim?
The length of time a claim takes to process will depend upon a number of factors, like the type and complexity of a claim, and the level of information we need to gather from other sources. Some of these factors may be entirely outside our control, but we are still able to provide general guidelines for each claim type. However, we aim to pay compensation in the vast majority of cases within seven days of the failure of the company. We aim to pay the remaining claims, which are likely to be more complex, within 20 working days.
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If I have more than £85,000 in an account, does that mean I will lose money?
A depositor whose total deposits with a failed bank exceed the compensation limit will receive compensation for the amount of their deposit up to the limit of £85,000.
Depositors with deposits above the limit may also receive additional funds in the form of a share of their savings following any distribution of assets as part of the insolvency process for their firm. How much they receive depends on the rate of recoveries (also known as the dividend rate) in the liquidation of the company.
The liquidation process can take a long time to complete. Depositors will have to wait until the liquidator has completed the process to find out how much more they might receive in total. There is no certainty that they will receive any further payments. This process is separate from the FSCS compensation process.
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What is the position for people who have multiple accounts with banks that are subsidiaries of another bank?
For people who hold multiple accounts in banks that are part of a larger group, if each of the banks is separately authorised by the Financial Services Authority:
- FSCS would pay compensation up to the limit of £85,000 per person, per authorised institution
If each of the banks is not separately authorised but is covered by the parent company's authorisation:
- FSCS would pay compensation up to the limit of £85,000 once, irrespective of how many different institutions a person held accounts with.
If you have a question about how a bank or building society is authorised, please contact the Financial Services Authority Consumer Contact Centre on 0845 606 1234.
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I have my money in a joint account in a High Street bank. How would FSCS pay compensation if the bank failed?
The compensation limit of £85,000 applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are a single or joint account holder. In the case of a joint account, FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise. This applies even if you have recently split up with your partner.
This means that each account holder in a joint account would be eligible for compensation up to the maximum limit.
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What happens if I owe money to a bank, building society or credit union that fails?
In the event that your bank, building society or credit union fails, you are obliged to continue making repayments in accordance with the terms and conditions of your mortgage, loan, etc. Further information about how to make repayments will be available from the administrator of your bank / building society / credit union.
The FSCS will only consider accounts that have a credit balance for compensation.
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Will you compensate me for any interest I have earned on my account?
Interest owed to the depositor as at the date the bank is declared in default by the FSCS will be paid as part of the compensation amount.
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Are offshore deposits covered?
We do not cover deposits outside the European Economic Area (EEA), or in the Channel Islands or Isle of Man.
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Does the Scheme cover deposits made in different currencies?
Yes. However, in most cases your deposit taker will provide details of the amount you hold with them in sterling, and the FSCS will pay you compensation in sterling.
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Are deposits held by nominee companies covered?
We cover deposits held in client accounts, for example by solicitors, and may cover deposits held by nominee companies. FSCS does not protect non-nominative deposits.
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Do you cover deposits made through solicitors and other professionals?
We generally cover client account arrangements (such as pooled accounts), which may be set up by solicitors, stockbrokers, landlords or other professionals, provided the deposit-taker (e.g. bank or building society) is authorised to accept deposits, which would normally be the case. The identities of the underlying clients and details of their respective entitlements to the deposit monies can be provided to the FSCS at the time a claim is made.
The Law Society has its own compensation scheme for its members' investment business, that only applies in the case of dishonesty of a solicitor. In those circumstances claims against solicitors in England and Wales should be referred to it. Claims against solicitors in Scotland should be referred to The Law Society of Scotland.
However, if the solicitor is holding your money in a client account with an authorised deposit-taker that fails, then your claim is against the deposit-taker and you should ask us to deal with it. The Law Society provides further guidance on this.
Claims against some other professionals can be made to us, but only if the claim arises on or after 1 December 2001. If your claim is for activities before this date, look at our Claiming compensation booklet for details of the organisations to contact.
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Is a business covered if the bank or building society it holds money with fails?
FSCS was set up mainly to assist private individuals, although some smaller businesses are also covered. Larger businesses are generally excluded, although there are some exceptions to this (for example for claims in respect of certain compulsory insurances). Our rules tell us which claims are eligible and form part of the FSA's Handbook of rules and guidance, under Redress, Compensation.
As an indicative guide only, for the purposes of deposit and investment claims, smaller companies are protected. A smaller company must meet two of the following criteria (as set out in section 247 of the Companies Act 1985 or section 382 of the Companies Act 2006 as applicable):
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Turnover: not more than £6.5 million
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Balance sheet total: not more than £3.26 million
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Total number of employees: not more than 50
For claims made under an insurance contract, small businesses are protected. A small business under the COMP rules is one that has an annual turnover of less than £1m.
The same levels of compensation apply whether the claimant is a private individual, small business, or a small company.
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Are pre-paid cards covered by the FSCS?
The FSCS does not protect e-money which could include money on pre-paid cards. This is because e-money does not satisfy the definition of a “deposit” and so is not within the scope of FSCS protection. E-money is covered by the Payment Services Directive which explains the protection given to users of e-money.