FSCS Protection for Investments: What It Covers
The Financial Services Compensation Scheme, or FSCS, is the UK's statutory safety net that compensates customers when an authorised financial firm fails. For investments it protects up to £85,000 per eligible person, per firm. It covers firm failure, not investment losses caused by markets falling. Capital at risk.
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What the FSCS is
The FSCS is an independent, statutory body set up by Parliament and funded by a levy on the financial services industry. It steps in when a firm authorised by the Financial Conduct Authority or Prudential Regulation Authority goes out of business and cannot meet claims against it. Protection is free and automatic; you do not apply in advance or pay for it. The scheme covers a range of products including deposits, investments, insurance, mortgages and pensions, each with its own compensation limit and rules. Its purpose is to maintain confidence in the financial system by ensuring ordinary consumers are not left empty-handed when a regulated firm collapses. For investors, the key point is that FSCS protection is about the failure of the firm, not the performance of your investments.
The £85,000 investment protection limit
For investment claims, the FSCS protects up to £85,000 per eligible person, per authorised firm, where the firm failed on or after 1 April 2019. This limit applies to investment business such as bad advice, misrepresentation or the failure of an investment provider or platform. It is important to distinguish this from deposit protection: on 1 December 2025 the FSCS deposit protection limit for cash held with banks, building societies and credit unions rose to £120,000 per person per firm, but the investment protection limit stayed at £85,000. The two are separate. If you hold assets across several distinct authorised firms, the £85,000 limit generally applies to each firm individually, so spreading holdings can increase your overall coverage, subject to how the firms are authorised.
What FSCS does and does not cover
FSCS investment protection covers loss caused by the failure of an authorised firm, for example if a broker or platform collapses and client assets cannot be returned, or if you received negligent regulated investment advice. It does not cover investment losses that simply result from markets moving against you; if your fund or shares fall in value, that is normal investment risk and no compensation is due. It also does not cover most cryptoassets, which sit largely outside the regulated perimeter, nor unregulated investments or firms not authorised in the UK. Poor performance, your own decisions, and price volatility are never protected. Understanding this boundary matters: FSCS is insurance against firm failure and misconduct, not a guarantee against losing money on legitimate investments. Capital at risk.
How segregated client accounts and CASS work
A separate but important safeguard is the FCA's client assets rules, known as CASS. Authorised investment firms must keep client money and client investments segregated from the firm's own assets, typically holding your cash in ring-fenced accounts and your securities in nominee or custody arrangements on your behalf. If the firm fails, these segregated assets should not form part of the firm's estate and are generally returned to clients, which means many customers get their assets back in full regardless of the FSCS limit. The FSCS then covers any shortfall, for instance if records were poor or client money was misused, up to the £85,000 investment limit. Segregation is a first line of defence, and FSCS compensation is the backstop when segregation fails.
Checking a firm and the EU equivalent
Before investing, confirm the firm is properly authorised so that FSCS protection applies. Search the free FCA register, which lists every authorised firm and its permissions, and match the firm's name and reference number exactly to guard against cloned-firm scams. Be cautious of firms operating from outside the UK, as UK protections may not apply. In the European Union there is no single equivalent; instead each member state runs an investor compensation scheme. For example, firms regulated by the Cyprus Securities and Exchange Commission are covered by the Investor Compensation Fund, which protects eligible clients up to €20,000, a notably lower ceiling than the UK's £85,000. Always check which regulator and scheme actually cover your account before depositing money.
The bottom line
FSCS protection is a genuine safety net worth understanding, covering up to £85,000 per firm if an authorised investment firm fails, but not ordinary market losses or crypto. Check the FCA register, spread holdings across firms where sensible, and know the EU limits are lower.
Frequently Asked Questions
How much does the FSCS protect for investments?
The FSCS protects up to £85,000 per eligible person, per authorised firm, for investment claims where the firm failed on or after 1 April 2019. This is separate from deposit protection, which rose to £120,000 per person per firm on 1 December 2025.
Does the FSCS cover investment losses if the market falls?
No. The FSCS does not compensate for normal investment losses caused by markets falling or poor performance. It covers loss arising from the failure of an authorised firm or negligent regulated advice, not the everyday risk that your investments can go down in value. Capital at risk.
Are cryptoassets covered by the FSCS?
Generally no. Most cryptoassets fall outside the regulated perimeter, so FSCS protection does not apply to them. Unregulated investments and firms not authorised in the UK are also excluded, which is why checking a firm's FCA authorisation before investing is so important.
How do I check a firm is FCA-authorised?
Search the free FCA register online and match the firm's name and reference number exactly. This helps you avoid cloned-firm scams that impersonate legitimate businesses. If a firm is not on the register or is based overseas, UK FSCS protection may not apply to your money.