Risk and time horizonBeginner6 min read

This content is for general education. It does not take your personal circumstances into account and is not a personal recommendation or investment advice.

FSCS protection for investments: what is (and isn’t) covered

This article explains when the Financial Services Compensation Scheme (FSCS) may compensate you for investment losses and when it will not. It focuses on claims against failed authorised firms and makes clear that FSCS does not cover normal market ups and downs or poor investment performance.

3 key takeaways

FSCS may be able to compensate eligible customers if an authorised firm that provided or advised on investments has failed and cannot meet valid claims, subject to FSCS rules, eligibility criteria and limits.

Under current FSCS rules, for most investment-related claims involving firms that fail on or after 1 April 2019, the compensation limit is up to £85,000 per eligible person, per firm. This is a separate limit from the FSCS deposit protection limit that applies to cash held with banks and building societies.

FSCS does not compensate for losses that arise purely because investments fall in value or do not perform as expected.

The basics

The

is the UK's statutory compensation scheme for customers of authorised financial firms that have failed. In this article, the focus is on investments rather than cash deposits.

may be able to compensate eligible customers if an

that provided or advised on investments has failed and cannot meet valid claims, subject to FSCS rules, eligibility criteria and limits.

Whether

protection applies depends on the product, the activity involved, and whether you and the firm meet eligibility rules. It is not automatic.

Under current

rules, for most investment-related claims involving firms that fail on or after 1 April 2019, the compensation limit is up to £85,000 per eligible person, per firm. This is a separate limit from the FSCS deposit protection limit that applies to cash held with banks and building societies.

compensation limits for investments are set per eligible person, per

. This is not a separate limit for each account or product.

does not compensate for losses that arise purely because investments fall in value or do not perform as expected. It does not protect you from normal market ups and downs.

You can use the

checker to see whether a type of investment might be covered if an authorised provider fails. The checker does not confirm that you personally will be entitled to compensation.

To understand which

is involved in this app, use our trust and protection information alongside the

and

guidance.

Illustrative example

Firm failure and market loss are not the same thing

Imagine an authorised investment platform fails and cannot return all the money or investments it owes. In that kind of firm-failure situation, FSCS may be able to help if the rules and eligibility conditions are met. Now compare that with a fund on the same platform falling in value because markets drop. That is a market loss, and FSCS does not compensate just because the investment performed badly.

Common misconceptions

Myth

FSCS means I cannot lose money on my investments.

Reality

FSCS may help with certain losses caused by an authorised firm failing, but it does not compensate for normal market falls or poor investment performance.

Myth

FSCS protection is a separate limit for every account or product I hold.

Reality

For investments, the headline limit is described per eligible person, per authorised firm, not as a separate allowance for each account or wrapper.

Myth

If an investment sits inside an ISA, it is automatically FSCS protected.

Reality

Whether FSCS can help depends on the product, the activity involved, and eligibility rules. The wrapper alone does not decide it.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“FSCS means I cannot lose money on my investments.”

“FSCS protection is a separate limit for every account or product I hold.”

“If an investment sits inside an ISA, it is automatically FSCS protected.”

Sources

Investwizz – About protection and regulation FSCS – Investments FSCS – What we cover FSCS – Investment protection checker

FSCS protection for investments: what is (and isn’t) covered

3 key takeaways

FSCS does not compensate for losses that arise purely because investments fall in value or do not perform as expected.

The basics

The

is the UK's statutory compensation scheme for customers of authorised financial firms that have failed. In this article, the focus is on investments rather than cash deposits.

may be able to compensate eligible customers if an

that provided or advised on investments has failed and cannot meet valid claims, subject to FSCS rules, eligibility criteria and limits.

Whether

protection applies depends on the product, the activity involved, and whether you and the firm meet eligibility rules. It is not automatic.

Under current

compensation limits for investments are set per eligible person, per

. This is not a separate limit for each account or product.

does not compensate for losses that arise purely because investments fall in value or do not perform as expected. It does not protect you from normal market ups and downs.

You can use the

checker to see whether a type of investment might be covered if an authorised provider fails. The checker does not confirm that you personally will be entitled to compensation.

To understand which

is involved in this app, use our trust and protection information alongside the

and

guidance.

Illustrative example

Firm failure and market loss are not the same thing

Common misconceptions

Myth

FSCS means I cannot lose money on my investments.

Reality

FSCS may help with certain losses caused by an authorised firm failing, but it does not compensate for normal market falls or poor investment performance.

Myth

FSCS protection is a separate limit for every account or product I hold.

Reality

For investments, the headline limit is described per eligible person, per authorised firm, not as a separate allowance for each account or wrapper.

Myth

If an investment sits inside an ISA, it is automatically FSCS protected.

Reality

Whether FSCS can help depends on the product, the activity involved, and eligibility rules. The wrapper alone does not decide it.

Test your understanding

Are these statements true or false? Tap to reveal the answer.

“FSCS means I cannot lose money on my investments.”

“FSCS protection is a separate limit for every account or product I hold.”

“If an investment sits inside an ISA, it is automatically FSCS protected.”

Sources

Investwizz – About protection and regulation FSCS – Investments FSCS – What we cover FSCS – Investment protection checker