Does FSCS cover poor investment performance?

No. The Financial Services Compensation Scheme (FSCS) does not cover poor investment performance. It pays compensation when a UK-authorised financial firm fails and cannot pay what it owes you, and it covers deposits, insurance, investments, pensions, mortgage advice and certain other regulated services¹. A fund that falls in value, a share price that drops or a portfolio that returns less than you hoped is not a failed firm, and the scheme has nothing to pay out on.

The FSCS states plainly that it does not pay compensation if your investment does not perform as well as you hoped². NatWest puts it the same way: the FSCS does not cover you if your investments do not perform as well as you hoped and you get back less than you originally put in³. That single distinction, between a firm failing and an investment falling, decides almost every question on this page.

What the scheme does cover is narrower and more specific than many investors assume. It protects you against the consequences of a regulated firm going under while owing you money, and against losses caused by bad advice from a regulated adviser that has since failed. It does not insure the value of what you buy.

What FSCS investment protection does cover: claims against failed firms

The scheme's investment protection is built around claims against failed regulated firms. The FCA's rules for firms selling higher-risk investments spell out the boundary: protection from the FSCS, in relation to claims against failed regulated firms, does not cover poor investment performance⁶. The same wording appears in the risk summaries that firms must give investors in peer-to-peer agreements and speculative illiquid securities⁶.

To claim, four things must all be true. The firm must have been authorised, it must have carried out a regulated activity for you, you must have lost money, and it must owe you a legal liability⁹. If any one of those fails, so does the claim. That is why the FSCS advises investors to ask a firm directly whether the activity it is carrying out is a regulated activity, and under what circumstances protection would apply if the firm failed¹⁰. It also suggests asking whether the product is covered, how much of your money is protected, and what would happen to it if the provider's business failed¹⁰.

Protection applies only where the authorised firm's activity is regulated by the Prudential Regulation Authority or the Financial Conduct Authority¹⁰. A firm can be authorised for one activity and not another, so the same company may be covered for some of what it does for you and not the rest.

For investments, the compensation limit is £85,000 per eligible person, per firm, for firms that failed after 1 April 2019⁴. Older failures fall under earlier limits: for firms that failed before 1 January 2010, the scheme paid 100% of the first £30,000 and 90% of the next £20,000, up to £48,000 per eligible person, per firm⁴. If you are checking whether a firm is covered, the FSCS publishes a checker and a guide to investment protection¹⁰.

Stocks & Shares ISAs and general investment accounts

The tax wrapper makes no difference to whether market losses are covered. Chip, which offers a General Investment Account, access to savings accounts and a Stocks & Shares ISA, states that the FSCS does not cover you for investment performance, or in the event that your investments go down and you get back less than you put in¹². A Stocks & Shares ISA is simply an account where the money you put in is invested on the stock markets¹³, and the investments inside it carry the same risk as the same investments held anywhere else.

What the wrapper can affect is the claim you make if the provider fails. HSBC states that you may be able to claim compensation with the FSCS if the provider of your Stocks & Shares ISA goes bust¹⁴. That is a claim about the firm, not about the investments. If the platform or provider is still trading and your funds have simply fallen, there is no FSCS claim to make.

The investments typically held in a Stocks & Shares ISA include company shares, unit trusts and investment funds, corporate bonds and government bonds¹⁵. Each of those can rise or fall, and none of them is insured against falling. If you want to understand what you are holding before you worry about protection, our guides to investment funds and investment risk set out how each type behaves.

Complaints about investments are a separate route from compensation. The Financial Ombudsman Service handled 1,448 complaints about Stocks and Shares ISAs in 2025/26¹⁶. If your complaint is about stocks and shares held in an ISA, the ombudsman directs consumers to its separate page about ISAs¹⁶. Complaining to the firm, and then to the ombudsman if you are unhappy with the answer, costs nothing and does not depend on the firm having failed.

Where FSCS protection does not apply: P2P loans, council investments and crypto

Several popular investment types sit outside the scheme entirely, and the reason is usually that they are not the kind of investment the FSCS can protect.

Peer-to-peer loans are the clearest example. The FCA's rules state that the FSCS, in relation to claims against failed regulated firms, does not cover investments in P2P loans⁶. Abundance, which offers council investments, confirms that the FSCS does not cover investments in P2P loans like its council investments¹⁷, and that holding them in an ISA does not change the fact that its investments do not have FSCS cover¹⁸. If you are weighing up this market, our guide to peer-to-peer lending and investment crowdfunding covers how it works.

Cryptoassets are outside the scheme for a different reason: most are not regulated. The FSCS says most cryptoassets are not FSCS protected because they are not regulated, and that this includes virtual currencies such as Bitcoin and Litecoin⁷. Qualifying cryptoassets are not protected because they are not a "specified investment" under the UK regulatory regime, and crypto exchange-traded notes are not a type of investment the FSCS can protect⁶. NatWest states that cryptocurrencies are not protected by the FSCS¹⁹, and Take Five, the national fraud awareness campaign, notes that they mostly are not covered²⁰. Our page on cryptoassets explains the rules in more detail.

Property investment platforms follow the same logic. CapitalRise states that the FSCS does not cover poor investment performance²¹, and that compensation would apply only in cases such as mis-selling or maladministration²². Cash held for its clients is protected up to £120,000 if the bank or banks holding it fail, and a valid claim in respect of regulated services on the insolvency of CapitalRise or its custodian is capped at £120,000²². The £120,000 figure is the deposit protection limit, not an investment guarantee.

If my investment platform goes bust, can I claim from the FSCS?

A platform failure is the situation the scheme was built for, and it is where a claim is most likely to succeed. Which? gives the example that if you invested using Hargreaves Lansdown and it went bust, you would be covered by the FSCS²⁴. The claim is about money the failed firm owes you, not about the performance of what you held.

Pensions work in a similar way. Which? states that you can seek compensation from the FSCS if your pension provider goes bust²⁵. For an investment held within a personal pension such as a SIPP, or a defined contribution occupational scheme, with a UK-regulated provider that failed, the FSCS may be able to pay compensation up to £85,000 per pension scheme member⁵. If a UK-regulated adviser gave you bad pension advice and has since failed, the limit is also up to £85,000⁵. The FSCS confirms that it protects pension advice, so it can pay compensation if your adviser fails²⁶.

Deposits held with banks, building societies and credit unions authorised by the PRA and FCA are protected up to £120,000 per eligible depositor²⁷. That limit applies to cash, not to investments, and it is why cash sitting in a platform account may be protected even when the investments beside it are not. Our guide to cash held on investment platforms explains how client money is treated.

The FSCS also warns that it cannot protect e-money or payment services firms¹¹. If your money is held with one of those rather than a bank, the deposit limit does not apply to it.

Insurance claims: FSCS pays 90%

Insurance sits under different rules from investments, and the payment rate is usually less than the full amount. For a firm that failed after 1 January 2010, the FSCS pays 90% of the total claim²⁸. That rate applies across most general insurance, including property, warranty and health claims, each paid at 90% of the claim²⁹. Health claims are also listed at 90%⁸.

There are exceptions. Employers' liability claims are paid at 100%⁸. Credit insurance claims are not eligible for FSCS protection at all²⁹.

The 90% rate matters because it means even a successful claim leaves a gap. That is a deliberate feature of the scheme, not an oversight, and it is worth knowing before assuming that insurance is fully covered.

Payment protection insurance has its own arrangements under the scheme³⁰. If you are pursuing a claim about a failed insurer, our guide to insurance covers how policies and providers are regulated.

Where FSCS protection stops

The scheme's limits are as important as its cover. For investments, the ceiling is £85,000 per eligible person, per firm, for firms that failed after 1 April 2019⁴. For deposits, it is £120,000 per eligible depositor²⁷. For pensions, it is £85,000 per pension scheme member⁵. These are per person and per firm, so money spread across several firms can be protected more than once, and money held with one firm is not.

The scheme also draws a line around what counts as a regulated activity. FSCS protection applies only where the authorised firm's activity is regulated by the PRA or the FCA¹⁰. A firm can be authorised and still carry out work for you that falls outside the scheme. That is why the FSCS suggests asking a firm to confirm that what it is doing for you is a regulated activity, and when protection would apply if it failed¹⁰.

Where the scheme does not apply, other routes may. The Financial Ombudsman Service can look at complaints about firms that are still trading, and it handled 1,448 complaints about Stocks and Shares ISAs in 2025/26¹⁶. If a firm has failed and you believe you have a claim, the FSCS sets out its eligibility rules and claims process⁹. If you are unsure whether a firm is covered, the FSCS checker and its guide to investment protection are the starting points¹⁰.