global insurance management

FSCS Compensation Limits - August 2015

Aug 14 2015

FSCS Compensation Limits

Relevance:                   All firms.

Action required:           None – but be aware of changes to some compensation limits.

The Financial Services Compensation Scheme (FSCS) has recently announced changes to the limits for compensation in certain areas of the financial services industry.

Whilst the changes do not directly affect insurance intermediary and broking firms, some will have a relevance to your business and your customers.

It is the PRA (Prudential Regulation Authority) that has pushed through the changes; aimed at depositor and policyholder protection.

(The PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms)

For Policyholders:

The following is an extract from the PRA Press Release:

For insurance policyholders, the PRA has changed the insurance limits for FSCS compensation to increase protection for policyholders in the event of an insurer failing. This increases the limit to 100% of cover for all long term policies, for professional indemnity insurance and claims arising from death or incapacity. This reflects the potential for significant adverse consequences to policyholders, and the wider financial system, of cover being disrupted. The limits for all other types of insurance remain the same.

Therefore, the changes here will affect insurers; the FSCS website has already been amended:

Insurance Business: unlimited.

Insurance Business: there is no upper limit on the amount of protection. (for claims against firms declared in default from 3 July 2015)

  • Long-term insurance benefits are protected 100%. 
  • Claims under compulsory insurance, professional insurance and certain claims for injury, sickness or infirmity of the policyholder are protected at 100%
  • Protects 90% of other types of claim with no upper limit.

General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005).

  • Protects 90% of the claim with no upper limit. Compulsory insurance is 100%.


We do not believe that this necessitates a change to a firm’s Terms of Business documents issued to clients/customers.

For Depositors:

The other changes made are only shown here for information purposes:

Deposits: £85,000* per person per firm (for claims against firms declared in default from 31 December 2010).

  • 100% of £85,000*.
  • *From 3 July 2015, the FSCS will provide a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails.
  • *From 1 January 2016 deposit limit for bank accounts will be £75,000, and £150,000 for joint accounts. The £75,000 figure is the sterling equivalent of €100,000 as required by the recast Deposit Guarantee Schemes Directive.

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