What the FSCS does not cover

The Financial Services Compensation Scheme (FSCS) is the UK's statutory compensation scheme, and it covers deposits, insurance, investments, pensions, mortgage advice and certain other regulated services if a UK-authorised financial firm fails¹. What it does not do is protect you from every kind of loss. The FSCS only covers firms authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) to do business in the UK, and only where the activity carried out for you is a regulated activity¹.

That leaves a good deal outside the safety net. An investment that falls in value, most scams, most cryptoassets, money held with e-money firms such as PayPal and Revolut, and dealings with unauthorised or overseas firms are all, in general, not covered. Even where the FSCS can help, it pays up to limits: £120,000 per person, per authorised firm, for deposits, and £85,000 for most other claims².

FSCS protects you when a firm fails, not when an investment falls

The single most common misunderstanding about the FSCS is what triggers a payout. The scheme responds to firm failure, not to prices falling. The FCA's own risk summary rules state it plainly:

This applies even when the investment itself was entirely legitimate and the firm holding it was fully authorised. If a fund falls in value, shares drop, or a bond defaults, that is investment risk, and it is yours to bear. The FSCS steps in only when a regulated firm has failed, typically because it has been placed into an insolvency process such as administration or liquidation⁸, and only for regulated activities the firm was carrying out for you⁹.

The same principle governs the edge cases. Investments in peer-to-peer (P2P) loans are not covered by the FSCS, even when they are arranged through a regulated platform: the scheme's rules state that FSCS protection "does not cover investments in P2P loans"⁴. Where an unregulated collective investment was arranged by a regulated adviser, the FSCS is restricted to covering losses arising from bad advice, not from the platform failing¹⁰. And where the business offering an investment is not FCA-regulated at all, the FSCS only considers claims against failed regulated firms, so there is no claim to make⁴.

The practical test is to separate two questions: did a regulated firm fail, and was the loss caused by that failure? If the answer to either is no, the FSCS is not the right door. The full scope of what the scheme does cover, and how its limits work, is explained in the FSCS explained and FSCS compensation limits.

E-money and payment apps: kept safe, but not by the FSCS

Electronic money, or e-money, is pre-paid money stored electronically, on cards, devices, online systems and digital databases, for making payments. The Financial Ombudsman Service lists PayPal, Revolut, Tide and Skrill among the services that fall under this description⁵. These firms are not banks, and the FSCS cannot protect them¹¹.

That does not mean your money is unguarded. E-money rules require the provider to keep customers' money safe at a different bank, separate from its own funds. But if the provider failed, you would need to make a claim to the administrator, the insolvency practitioner handling the failure, rather than to the FSCS¹². The FSCS states the position directly: it can't protect you if an e-money firm or payment services firm fails¹³.

A 2024 Financial Conduct Authority Consumer Panel report on payments and bank account alternatives noted that PayPal has no FSCS protection¹⁴. MoneyHelper makes the same point about app-based accounts that are not banks: if an account is not a bank account, it is likely to be a virtual current account covered by e-money rules, with money kept safe at a different bank but no FSCS claim if the provider fails¹².

The FSCS's own protection checker can confirm whether a particular firm's deposits are protected, and it flags that e-money and payment services firms are outside deposit protection¹³. If a provider cannot be found in the checker at all, that is itself a warning sign worth investigating before depositing money.

Scams and fraud: usually outside FSCS cover

The FSCS has said that in most situations it cannot compensate people for money lost due to scams or fraud. The exception is narrow: where bad advice to invest in something that turns out to be a scam came from an authorised financial adviser, and that adviser has failed, the FSCS may pay⁶. Outside that exception, a scam loss is not an FSCS matter, because the FSCS compensates customers of failed regulated firms, and most fraudsters are not regulated firms in the first place.

The FSCS's own fraud guidance notes that crypto assets are virtual currencies, not FCA regulated, and therefore not FSCS protected¹⁵. Take Five, the national anti-fraud campaign, makes the same point about cryptocurrency fraud: losses from it mostly aren't covered by the FSCS¹⁶.

For most scam victims, the route to redress runs elsewhere. If you were tricked into making a payment yourself (an authorised push payment scam), your first port of call is your bank or payment provider, which may reimburse you under the payment services rules. If the bank refuses, the Financial Ombudsman Service can look at the complaint. Which? also 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 adviser¹⁷. That last point matters: a regulated adviser who recommended an unregulated investment can create an FSCS claim if the adviser later fails.

Cryptoassets: most are not protected

Most cryptoassets are not FSCS protected because they are not regulated, and the FSCS's own materials name Bitcoin and Litecoin as examples⁶. The FCA does not regulate most cryptoassets, so the FSCS cannot protect you if a platform that exchanges or holds them goes out of business¹⁹. The FSCS states that cryptoassets generally aren't protected by organisations like the FCA or FSCS, and that if your investment is stolen, there isn't an easy way to get your money back, and FSCS can't protect you¹⁹.

Even the regulated corner of the crypto market sits outside the scheme. Since cryptoassets became a regulated activity for certain firms, the FCA's risk summary rules have required firms to tell customers that:

The same rules apply to cryptoasset exchange traded notes admitted to a UK recognised investment exchange: the FSCS doesn't protect them because it is not a type of investment the FSCS can protect⁴. In other words, buying crypto through a regulated firm does not bring FSCS cover with it.

Take Five's guidance on crypto fraud is blunt about the combined effect: most cryptocurrencies aren't regulated by the FCA, which means they're not protected by the FSCS, and losses from cryptocurrency fraud mostly aren't covered either¹⁶. Anyone holding cryptoassets should assume that the full risk of theft, platform failure and price collapse sits with them.

Limits on what the FSCS will pay: £120,000 for deposits, £85,000 for most other claims

Even where the FSCS can help, it pays to limits. On 1 December 2025 the deposit protection limit rose to £120,000 per eligible person, per authorised firm². The FSCS now protects eligible deposits from the first pound up to £120,000 per person, per authorised firm⁷, and the limit applies to the total you hold across all accounts with that firm, in your own name or where you are listed as the beneficiary²⁰.

One point of caution on the deposit figure: a Commons Library briefing dated 8 July 2026 still describes savings accounts at mainstream banks and building societies as protected "up to £85,000 per institution"²³. The FSCS's own current guidance states £120,000².

For claims other than deposits, the £85,000 limit is the working figure. Defined benefit pension transfer advice claims are compensated up to the FSCS's £85,000 limit for pension advice³. Insurance claims work differently again, as the next sections set out. The detail of how each limit works, including how joint accounts and business accounts are treated, is covered in FSCS compensation limits.

Where temporary high balance cover stops

The £120,000 deposit limit is not the whole story for people who briefly hold a large sum. The FSCS protects certain "temporary high balances", exceptional and short-lived deposits resulting from major life events, at a higher level for a limited period. The FSCS's press release of March 2026 describes protection available for six months when receiving a large sum after major life events, such as selling a home, receiving an inheritance, or drawing down a large pension sum⁷.

The level of that protection is stated differently across the FSCS's own materials. Most of its guidance, including its deposit protection pages and its 16-page leaflet, says qualifying temporary high balances are protected up to £1.4 million for six months from when the amount was first deposited⁷. One FSCS claims page states: "If it's temporary, we cover up to £1m for up to six months"²⁵. The Bank of England's explainer gives the higher figure, up to £1.4 million in most cases, with no limit for temporary high balances linked to certain events⁸, and the Building Societies Association and MoneyHelper both state £1.4m for up to six months²². The £1.4 million figure appears in the greater number of official documents and is the one to plan around, but the discrepancy is real.

The qualifying events are specific. The FSCS's leaflet lists compensation paid for personal injury among them²⁴, and MoneyHelper gives money from the sale of a house as an example²⁶. The boundaries are equally specific in the other direction: where the money is deposited in preparation for buying a property, the protection applies only to your main residence and excludes buy-to-let properties or holiday homes, and general savings for a property do not qualify¹.

Brands sharing one banking licence are covered only once

The deposit limit applies per authorised firm, not per brand. If you have money in multiple accounts with multiple banks that are part of the same banking group and share a banking licence, they are treated as one bank, with the £120,000 limit applying across all of them²¹. The FSCS states this means they share protection limits across all the accounts within the banks in that group, not separate limits for each bank¹³.

The Bank of England puts the same point in its explainer: anyone who has accounts under different brands owned by the same firm is still only protected up to £120,000⁸. Which?'s coverage of the savings ladder makes the practical point with named examples: banks that share a licence, such as Bank of Scotland, Halifax and Lloyds, count as a single provider, and the FSCS limit applies per banking group, not per brand²⁷.

Real examples show how this bites:

• Barclays and Tesco Bank: since Tesco Bank's savings, credit cards and loans moved under Barclays, the FSCS limit of £120,000 is now shared between the two banks¹⁰.
• Coventry Building Society and The Co-operative Bank: after Coventry acquired The Co-operative Bank, they continue to exist as separate brands operating under separate banking licences, meaning up to £120,000 is protected with each bank¹⁰.
• Bank of Scotland, Halifax and Lloyds: these brands share a licence and count as a single provider for the FSCS limit²⁷.

The FSCS's leaflet illustrates the mechanics with a worked example: if a current account and a savings account share one authorisation number, they are classed as a single firm and the £120,000 limit is shared across both²⁴. The way to check is the firm's authorisation number, not the brand name on the card. This is covered in more detail in FSCS protection when bank brands share a licence.

Insurance claims the FSCS does not pay in full

When an insurer fails, the FSCS protects most types of general insurance at 90%, without an upper limit²⁸. But some kinds of insurance are not eligible for FSCS protection at all. The FSCS lists them: goods in transit, marine, aviation and credit insurance, and contracts of reinsurance for insurance firms or brokers and financial advisers²⁹. Its flood insurance page confirms the same exclusions³⁰.

Where cover does apply, the payment rate depends on the type of claim:

Which? summarises the same structure: non-compulsory general insurance such as home insurance is paid at 90% of the claim, while long-term care insurance is covered at 100% with no upper limit where the firm failed after 3 July 2015¹⁰. For long-term insurance, including pensions that qualify as contracts of long-term insurance, the FSCS covers the policy at 100% with no upper cap³¹.

One further difference from deposits: for insurance failures, the FSCS does not handle customer claims directly. The insurer will likely appoint a separate run-off agent, also known as a claims handling agent, to manage claims from end to end²⁸. Eligibility also depends on the failed company having been regulated by the PRA²⁹.

Pensions: defined benefit schemes sit with the Pension Protection Fund

Pension protection is split between two bodies, and the boundary confuses many people. The FSCS protects the advice you received to transfer out of a defined benefit (DB) pension, but its protection does not include DB pension schemes themselves. The Pension Protection Fund protects those³². The FSCS's dedicated DB transfer pages state the same: protection does not include DB pension schemes themselves, which are protected by the Pension Protection Fund³.

For the advice side, the conditions are strict. The adviser must have gone out of business for the FSCS to be able to help, and it must have been regulated by the FCA at the time it gave the advice. Claims are compensated up to the £85,000 limit for pension advice, and product and adviser charges are capped at 1.25% in line with FCA guidance when redress is calculated³.

For the pensions themselves, FSCS protection varies depending on the type of pension product, and there are limits to the amount it can compensate³³. Generally, the FSCS can protect pensions provided by UK-regulated insurers, as long as they qualify as 'contracts of long-term insurance'³¹, and where it can pay compensation, it covers the pension at 100% with no upper cap³¹. Where the firm failed after 1 April 2019 and it was your pension provider, the FSCS can normally pay 100% of your claim, with no upper limit³¹. A separate condition applies throughout: the FSCS can only protect you if the FCA has authorised your pension provider³³.

Who cannot claim: excluded depositors and larger businesses

Not everyone who loses money to a failed firm can claim. The FCA's compensation rules (COMP 4.2) set out categories of claimant who are excluded. They include firms other than a sole trader firm, a credit union or a small business, and overseas financial services institutions; large companies, large partnerships and large mutual associations; and collective investment schemes and anyone who is the operator or depositary of such a scheme³⁴. The rules also exclude bodies corporate, partnerships and associations which are not small businesses where the claim relates to protected non-investment insurance distribution, and any person other than a natural person where the claim relates to protected debt management business³⁴.

In plainer terms, the FSCS states that large businesses are usually excluded, although there are some exceptions for deposits and insurance³⁵. For deposits specifically, the picture is more generous: most businesses are protected, though authorised financial services firms are not, with no size test applied to deposit claims²⁰. The FSCS confirms that in the case of deposits, large companies are also able to claim compensation, although some exclusions may apply¹.

For insurance and other non-deposit claims, a size test does apply: small companies must have an annual turnover of less than £1m to be eligible to claim compensation¹. A small business that holds a current account and a savings account with the same bank can claim up to £120,000 for each account if the business is a separate legal entity, such as a limited company or LLP²¹.

Unauthorised and overseas firms: no authorisation, no cover

The FSCS only covers financial services firms authorised by the FCA or the PRA to do business in the UK¹. If the firm was never authorised, or was not authorised at the time it dealt with you, there is no FSCS protection. The FSCS's investment protection guidance stresses that the particular activity the authorised firm is carrying out for you must be regulated by the PRA or the FCA, and recommends asking the firm to confirm that the activity is a regulated activity and under what circumstances you would be protected by FSCS if the firm failed⁹.

The same guidance suggests asking direct questions before investing: does FSCS protect the financial advice, what happens if the firm gives bad advice and then fails, and are all the products being advised on FSCS protected if the provider fails³⁶. For pensions, the questions to put to an adviser include whether they are an FCA authorised financial adviser, whether FSCS protects the advice if it turns out to be bad advice, and how much of the pot is protected³⁷.

Overseas firms present a related problem. The FSCS's protection checker notes that mutual insurers do not appear in it, except credit unions that can take deposits³⁸, and its "can't find a firm" guidance gives the example of e-money and payment services firms it cannot protect³⁸. Wealth management companies and online platforms add a further twist: if the wealth management company is authorised and regulated, its own funds wouldn't be covered for deposit protection, so money placed with it may sit outside deposit protection even though the firm itself is regulated²⁰.

Where to turn when the FSCS cannot help

If the FSCS cannot help, other routes may still exist, and the right one depends on why the FSCS said no.

1. If the firm is still trading and you have a complaint about its service or advice, complain to the firm first, then take the complaint to the Financial Ombudsman Service if the firm rejects it or eight weeks pass. The process is covered in how to complain to a financial firm.
2. If you were scammed, contact your bank or payment provider immediately and ask about reimbursement. The payment errors page explains the bank's duties, and the ombudsman can review a refusal.
3. If the firm was never authorised, the FSCS cannot help, and Which? notes you won't be covered unless the investment resulted from negligent advice from an independent financial adviser¹⁷. Action Fraud is the route for reporting, and scams and fraud explains the landscape.
4. If your claim relates to business conducted before the FSCS's cover started, the scheme is unlikely to be able to help. FSCS didn't exist for general insurance business conducted before 14 January 2005³⁹, or for mortgage advice business conducted before 31 October 2004³⁹. Claims against an insurer, bank or investment firm that failed before 1 December 2001 are covered by the rules governing the separate compensation schemes that existed before that date³⁵.

Two further points on claiming. First, the FSCS is free to use, funded by a levy on the authorised firms whose customers it protects⁸, and customers keep 100% of any compensation owed when claiming directly¹⁸. Which? puts it bluntly: claiming with the FSCS is 100% free and there's zero advantage in using a separate claims management company¹⁷. The FSCS will never ask you to send it money³. What claims management companies do, and what they charge, is covered in claims management companies.

Second, in most circumstances customers won't need to make a claim at all: the FSCS works with the failed firm, the FCA and the insolvency practitioner, and for deposits it aims to pay compensation within seven days of a bank, building society or credit union failing¹. How the process works, and how to challenge a decision, is covered in how to claim compensation from the FSCS and how to challenge an FSCS decision. For free, impartial help at any point, MoneyHelper and the FSCS itself (0800 678 1100) can explain which route fits your situation²⁴.