FSCS protection for pensions, platforms and funds

The Financial Services Compensation Scheme (FSCS) is the UK's compensation scheme of last resort. It steps in when a financial firm authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) fails, covering deposits, insurance, investments, pensions, mortgage advice and certain other regulated services¹. For investment business, the headline limit is £85,000 per person, per authorised firm². For pensions that qualify as contracts of long-term insurance, the FSCS states it will "cover the pension at 100% with no upper cap"³.

What that means in practice depends on the type of pension or investment you hold, and on what the failed firm was actually doing for you. A self-invested personal pension (SIPP) is normally covered at 100% but capped at £85,000³. A defined benefit workplace scheme is not covered by the FSCS at all; it is protected by the separate Pension Protection Fund⁴. And no version of FSCS cover protects you simply because your investments fell in value: the scheme rules state plainly that FSCS protection "does not cover poor investment performance"⁵.

What FSCS protection covers for investments, pensions and funds

The FSCS covers a range of financial products if a UK-authorised financial firm fails, including deposits, insurance, investments and pensions, plus mortgage advice and certain other regulated services¹. It describes itself as covering seven different types of business: deposits, insurance policies, insurance broking, investment business, mortgage (home finance) advice or broking, debt management, and funeral plans². It is free to use and funded by a levy on the authorised firms whose customers it protects².

Two conditions govern almost everything on this page. First, the firm must have been authorised by the FCA or the PRA to do business in the UK². Second, the particular activity the firm was carrying out for you must have been regulated: the FSCS's investment protection guide is explicit that "the particular activity that the authorised firm is carrying out for you must be regulated by the PRA or the FCA" for protection to apply⁷. A firm can be authorised for one thing and doing something else for you that is not protected.

Within pensions, the FSCS can generally protect pensions provided by UK-regulated insurers, as long as they qualify as "contracts of long-term insurance"³. Its protection extends across a wide range of products and services: deposits, insurance policies, some investments, insurance broking, mortgage advice, SIPPs, pensions advice, PPI, debt management plans and funeral plans⁸. But the FSCS itself stresses that "FSCS protection varies depending on the type of pension product, and there are limits to the amount we can compensate"⁹. The rest of this page works through those types one by one.

FSCS investment cover: up to £85,000 per person, per firm

For investment business, the FSCS protects up to £85,000 per person, per authorised firm². The same £85,000 per person, per firm limit applies to debt management and funeral plans², and to firms that failed after 1 April 2019 in the debt management class¹⁰. For firms that failed between 1 April 2018 and 31 March 2019, the debt management limit was £50,000 per eligible person, per firm¹⁰.

The "per firm" part matters as much as the number. If you hold investments with two unrelated authorised firms and both fail, you have two separate £85,000 claims. If you hold everything with one firm, you have one. This is the same structure as deposit protection, where the limit is £120,000 per person, per authorised firm⁶, and where money spread across brands that share one banking licence counts together towards a single limit. The equivalent question for investments is which firm was actually carrying out the regulated activity for you, which is why the FSCS tells people to check the firm and the activity before signing up to anything⁷.

Where investments are held inside a pension wrapper, the limit is expressed per pension scheme member: the FSCS states it "may be able to pay compensation up to £85,000 per pension scheme member" where a UK-regulated provider of a personal pension (for example a SIPP) or a defined contribution occupational pension scheme has failed³. Cash held in a bank account is covered at the deposit limit of £120,000⁶, and the FSCS also protects certain qualifying temporary high balances up to £1.4 million for six months from when the amount was first deposited¹¹. Which limit applies depends on the regulated activity, not on whether you think of the money as savings.

FSCS protects against a firm failing, not against investments falling in value

This is the distinction that catches most people out. FSCS protection exists for when a firm fails, not for when markets fall. The FCA's own scheme rules for risk summaries require firms to tell investors that "Protection from the Financial Services Compensation Scheme (FSCS), in relation to claims against failed regulated firms, does not cover poor investment performance"⁵. The same rule text states that FSCS protection does not cover investments in peer-to-peer loans⁵.

So if your fund manager, platform or pension provider is solvent and your portfolio has dropped, the FSCS has no role. Your options in that situation are the firm's own complaints process and, if that fails, the Financial Ombudsman Service, which can look at complaints where you were given wrong investment advice or misleading information, or lost money through an admin error or a delayed transfer or payment into an ISA account⁸. The ombudsman can tell a firm to put things right and pay compensation for distress or inconvenience where wrong advice caused loss¹².

What the FSCS does cover, in the investment class, includes bad or misleading investment or pension advice (such as advice to transfer a pension into a SIPP), negligent management of investments, misrepresentation, and fraud². In other words, the trigger is a failed firm plus a protected claim against it, not an unhappy outcome. The FSCS's guide to investment protection frames the right questions to ask any adviser before you invest: whether FSCS protects the financial advice, what happens if the firm gives bad advice and then fails, and whether the products being recommended are FSCS protected if the provider fails⁷.

Pensions: how cover depends on the type of pension

Pension protection is where the FSCS's rules diverge most sharply by product type. The FSCS can only protect you if the FCA has authorised your pension provider⁹, and even then the level of cover depends on what kind of pension it is. A useful summary from pension provider PensionBee sets out the split: defined contribution pensions are usually covered under the FSCS, while defined benefit (final salary) schemes "don't benefit from FSCS pension protection. Instead, these are covered by the Pension Protection Fund (PPF)"⁴.

The FSCS's own pension protection guide encourages people to ask their provider direct questions before committing: does FSCS protect my pension, how much of my pot is protected, are there other protections available, am I still protected if I buy an annuity, what if I buy other products with my pot, what would happen to your pension if something happened to your business, and if I transfer money across from an existing pension, will that also be protected¹⁴. It also stresses that it is "really important you know how much of your money FSCS can protect before you sign up to anything"¹⁴.

One further wrinkle: where pension money is held in trust, protection depends on the type of trust⁶. The FSCS's deposit protection guidance for banks states that eligible beneficiaries of certain trust structures, including bare trusts, personal pensions, SIPPs, money purchase SSASs and money purchase or defined contribution occupational pension schemes, are protected up to £120,000 for each beneficiary of that type across all accounts held with the bank¹⁵. That is deposit protection on cash held with a bank, and it sits alongside, not instead of, the investment protection rules that govern the pension wrapper itself.

Annuities and insured pensions: up to 100% with no upper limit

Pensions provided by UK-regulated insurers that qualify as contracts of long-term insurance get the strongest protection the FSCS offers. Its pensions page states: "Where FSCS can pay compensation, we will cover the pension at 100% with no upper cap"³. The same page says that where the firm failed after 1 April 2019 and it was your pension provider, "we can normally pay 100% of your claim, with no upper limit"³. PensionBee's summary agrees: long-term insurance contracts, for example personal pensions, are covered up to 100% with no upper limit⁴.

Annuities bought with pension savings fall here too. The FSCS's protection leaflet states that where retirement income is provided under a life insurance contract, "we will pay the entire claim"¹⁶. This is a different regime from general insurance, where the FSCS protects most types at 90% with no upper limit¹⁷, and from compulsory general insurance bought via a failed broker or adviser, which is protected at 100%¹⁸.

The reason for the difference is what the promise is. An insured pension is a long-term contract with an insurer to pay an income, and if the insurer fails the FSCS stands behind the whole contract rather than a slice of it. By contrast, a SIPP is a wrapper in which you (or an adviser) choose investments, so the FSCS covers the wrapper at 100% but caps the compensation at £85,000³. If you are buying an annuity or an insured pension, the FSCS's own suggested questions include whether you are still protected if you buy one¹⁴.

SIPPs and platforms: when the provider or adviser goes bust

For SIPPs, the FSCS states: "In respect of SIPPs, where FSCS can pay compensation, we will normally cover the pension at 100% with an upper cap of £85,000"³. Where the SIPP holds investments rather than insured pension contracts, the per-member investment limit of £85,000 applies³. SIPP operators are regulated by the FCA, as the Financial Ombudsman Service notes when explaining that providers of SIPPs who may include unregulated collective investment schemes in their products are FCA-regulated firms¹⁹.

Platform failures are usually less dramatic than people fear, because of how assets are held. If you invested using a well-known investment platform such as Hargreaves Lansdown and it went bust, Which? notes that you would be covered by the FSCS²⁰. The FSCS's protection checker is based on the FCA's Financial Services Register, so the first check is always whether the firm and the activity were authorised²¹.

SIPP claims are, however, among the slower and more complex the FSCS handles. The FSCS has said that claims often go through an additional stage when they involve "pension liberation, fraud, SIPP operators, non-standard investments, or whenever it's not clear that the firm's activities will give rise to a protected claim"²². Its Outlook publication records that it has paid additional compensation for claims against SIPP operators under Section 27 of the Financial Services and Markets Act 2000²³. In greenwashing-related failures, where investors were advised into funds by now-failed IFAs or SIPP operators, the FSCS says it "has been able to protect the majority of these investors"²⁴.

Bad advice from a failed adviser, including defined benefit pension transfers

The FSCS also compensates for bad advice, but only where the adviser has failed. Its pensions page states: "FSCS may be able to pay compensation up to £85,000 if the adviser has failed" and the adviser was UK-regulated³. The same £85,000 limit appears in its guidance on bad pension advice, for example advice to transfer a pension to another provider or invest in a particular fund²⁵. For bad advice in relation to pensions from failures between 1 January 2010 and 2 July 2015, the limit was lower: up to £50,000 per eligible person, per firm⁹.

Defined benefit transfer claims have their own process. The adviser must have gone out of business, and must have been regulated by the FCA at the time it gave the advice¹³. The FSCS caps product and adviser charges at 1.25% in its redress calculations, in line with FCA guidance¹³. Compensation may be refused where there is no evidence of the advice, no evidence of loss, a gain is shown, or the claim falls outside eligible dates¹³. From 20 November 2026, claims decided on or after that date where compensation is payable for defined contribution pension transfers will use the FSCS's new in-house notional transfer value methodology, based on 50% of FTSE 100 Total Return Index growth²⁶.

The Financial Ombudsman Service covers the same territory where the firm is still trading. Its guidance on pension transfer complaints lists common issues: an adviser who didn't check your attitude to risk or capacity for loss, recommended unsuitable investments, or advised transferring workplace pension benefits with the loss of employer contributions or guaranteed final salary benefits¹². The FSCS's protection for DB transfer claims does not extend to the schemes themselves: "our protection doesn't include DB pension schemes themselves. The Pension Protection Fund protects these"¹³.

Where FSCS protection does not apply: crypto, unauthorised firms and scams

The exclusions are as important as the cover. The FCA's scheme rules for risk summaries state that the FSCS "doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime" for qualifying cryptoassets, and the same wording applies to cryptoasset exchange traded notes admitted to a UK recognised investment exchange⁵. The FSCS's own podcast guidance is blunter: "Most cryptoassets, for example, aren't FSCS protected because they're not regulated. This includes virtual currencies like Bitcoin and Litecoin"²⁷.

Unregulated investments generally follow the same rule. Which? notes that if you put money into unregulated investments, "you won't be covered by the FSCS, unless the investment was the result of negligent advice from an independent financial adviser"²⁰. Where the business offering an investment is not FCA-regulated, the scheme rules state that FSCS protection "only considers claims against failed regulated firms"⁵. The FSCS cannot protect e-money or payment services firms either⁶, a point it repeated when a payment services firm entered liquidation: "The FSCS only applies to certain types of activity and does not cover payment services"²⁸.

Scams are the hardest exclusion for people who lose money. The FSCS says that "in most situations, FSCS unfortunately can't compensate people for money that has been lost due to scams or fraud. The exception is where bad advice came from an authorised financial adviser to invest in something that turns out to be a scam"²⁷. It is currently reporting at least one phishing attempt and one fake investment website per day, and issues cease-and-desist letters to scammers who use its logo or fake its protection²⁹. It has also warned of fraudsters emailing consumers claiming to represent the FSCS and asking them to share personal data³⁰.

How to check your cover and make a claim

Checking cover comes down to two steps, both set out in the FSCS's guide to investment protection. First, check your provider is authorised by the FCA, using the Financial Services Register³¹. Second, find out whether the particular activity the authorised firm is carrying out for you is regulated by the PRA or the FCA³¹. The FSCS's protection checker is based on the FCA's Financial Services Register, which you can search yourself to check if your firm is authorised²¹. If you cannot find your firm, the FSCS has a page for that too, and it repeats the warning that it cannot protect you if an e-money firm or payment services firm fails²¹.

Making a claim is free. The FSCS describes itself as "independent, free and funded by the financial services industry"³³, and says customers keep 100% of any compensation owed when claiming directly³⁵. Before claiming, it lists what each type of claim needs to be processed, covering general insurance, investments, contracts for difference, debentures, home income plans, shares, mortgage advice, mortgage endowments, pensions, PPI, structured deposits and whole of life insurance³⁶. The Bank of England's explainer notes that FSCS action is typically triggered when a firm is placed into an insolvency process such as administration or liquidation³². If you disagree with an FSCS decision, there are routes to challenge it, and the FSCS vs Financial Ombudsman Service comparison explains which body handles which kind of dispute.

Timescales, cost and avoiding fake FSCS callers

Timescales vary a lot by claim type. For deposits, the FSCS aims to pay compensation within seven days of a bank, building society or credit union failing², and states it will pay within seven working days of failure, with more complex cases including temporary high balance claims taking longer¹¹. The Bank of England says these payments are typically made within seven days of the firm failing, although complex claims may take longer³². For credit unions, money is normally returned within seven working days from the date the credit union failed³⁷.

Investment and pension claims are slower. The FSCS has said that most claims take around five months to one year to process, with claims involving pension liberation, fraud, SIPP operators or non-standard investments often needing an additional stage²². Debt management claims depend on how quickly the insolvency practitioner can reconcile the failed firm's data¹⁰. In most circumstances for deposit-type failures, customers will not need to make a claim at all: the FSCS works with the failed firm, the FCA and the insolvency practitioner, and compensates automatically³⁵.

On cost, the position is unambiguous: the FSCS is free to customers, and it states it "will never ask you to send us money"¹³. Claims management companies charge for a service you can do yourself for nothing, which is why the FSCS stresses that customers keep 100% of compensation when claiming directly³⁵. If you are considering using one, read what claims management companies do and what they charge first.

Finally, be alert to anyone contacting you claiming to be from the FSCS. The FSCS has warned of fake emails from fraudsters asking consumers to share personal data³⁰, of spoofed caller IDs making calls look as though they come from the FSCS²⁷, and of scammers using its logo⁶. It reports at least one phishing attempt and one fake investment website per day²⁹. If in doubt, contact the FSCS directly on 0800 678 1100 or at communication@fscs.org.uk¹⁶, and never give account details or money to someone who calls you out of the blue. For the wider picture of what the scheme does and does not cover, see the FSCS explained and what the FSCS does not cover.