How does FSCS protection help small business owners?
When it comes to managing your finances, it's important to know that your money is protected. The Financial Services Compensation Scheme (FSCS) is a safety net put in place to protect consumers in the event that a financial services firm becomes insolvent or unable to meet its obligations.
What does the FSCS do?
The FSCS was established in 2001 and is an independent organisation funded by the financial services industry. It covers a wide range of financial products and services, including bank accounts, mortgages, insurance policies, investments, and pensions.
If a financial services firm is unable to meet its obligations, the FSCS will step in to provide compensation to eligible consumers. The amount of compensation available will depend on the type of product or service and the circumstances of the firm's failure.
How much protection does FSCS provide?
For instance, for deposits held in a bank or building society account, the FSCS will provide compensation up to £85,000 per person, per authorized firm. So if you have more than £85,000 in one account, it's a good idea to spread your money across different banks to ensure that all your savings are protected.
For investments, the FSCS will provide compensation up to £85,000 per person, per firm, and for insurance policies, the compensation limit is 100% of the claim with no upper limit. For pensions, the compensation limit will depend on the type of pension and whether it is in payment or not.
When should you seek help from the FSCS?
It's important to note that the FSCS is a last resort, and you should always try to resolve any issues with your financial services firm first. Most firms are regulated by the Financial Conduct Authority (FCA), which sets out rules and standards that firms must follow to protect consumers.
In summary, FSCS protection is a safety net that provides peace of mind for consumers that their money is protected in the event of a financial services firm failing. The compensation available will depend on the type of product or service and the circumstances of the firm's failure, but it's always a good idea to spread your money across different banks to ensure that all your savings are protected.
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