Financial Services Compensation Scheme: How to make a claim
All customers of authorised financial services firms in the UK are covered by the Financial Services Compensation Scheme (FSCS). It will pay compensation if a firm is unable, or likely to be unable, to pay claims against it - when this happens the firm falls into default. If a bank collapses and takes your savings with it you will be able to claim compensation from the scheme.
Reclaiming savings
If you have savings with a bank or building society that becomes insolvent, you can reclaim up to 100% of the first £85,000 you hold in each provider with its own banking licence. You should check which banks and building societies share a licence.
You do not need to contact the institution yourself in order to make a claim. You will typically be required to complete a claims application form, which the FSCS will send you after the provider has gone into default.
It is advisable that you send the form back as soon as you can - the FSCS aims to process all claims within six months after a declaration of default, although it may take longer depending on the complexity of the claim or whether or not there have been any delays with the liquidator.
The FSCS normally issues a cheque for compensation, but says it will consider other alternatives for claimants who do not have a bank or building society account.
Making a claim against an insurer
When it comes to insurance, the FSCS will cover life insurance policies such as pensions, annuities and endowments, as well as motor, home and employers' liability insurance. For these claims you will again have to fill in an application form from the FSCS (not from your insurer) in order for it to consider your claim.
If you are making a claim against an insurance company that has gone bust, the FSCS could compensate you for the premiums you have already paid (if the insurer is unable to do so) and will try and help you transfer policies or pay you compensation.
Compensation is unlimited under the scheme, but you will not get all your money back unless it is a claim for a compulsory insurance, such as third-party motor cover. The scheme covers 100% of the first £2,000 you have lost, plus 90% of the remainder of the claim.
If you have specific questions or concerns about the details of your insurance policy rather than anything to do with compensation, you should speak directly to the insolvency practitioners who will be responsible for the administration of the insurer and the settlement of any claims. They should contact you to explain that your insurance provider has gone under.
Reclaiming investments
If you are making a claim against an investment company that has gone under, you will have to supply the FSCS with specific details about your investment, such as its type, how much you invested and when. If your business with the company was only ever before August 1988 then the FSCS will not be able to help you.
The FSCS will usually ask you to send any documents relating to your investments which the company may have sent you. The more information you provide the smoother the claiming process may be.
You can contact the FSCS on 020 7892 7300 or visit www.fscs.org.uk for more information.