FSCS

The Financial Services Compensation Scheme is the United Kingdom's statutory compensation fund for clients of failed financial firms. It is funded by industry levies, independent of the firms it covers, and it is the strongest single protection available to a retail trader on this site.

What it covers

Where an FCA-authorised investment firm fails and cannot return client money or assets, the FSCS pays eligible claims up to £85,000 per eligible person per firm. Cover applies to protected investment business, which includes money held for a client by an authorised broker under the CASS client asset rules.

The limit is per person per firm, not per account: three accounts at one failed broker share one £85,000 ceiling, while accounts at two separate failed firms carry a ceiling each.

What it does not cover

Market losses. The scheme exists for money a firm cannot return, not for a position that moved against you. A trading account reduced to zero by losing trades has no claim.

Nor does it cover clients of an unauthorised firm, or clients of a non-UK entity in the same group. This is the exclusion that matters most in practice: a broker whose UK company is FSCS-covered may onboard non-UK clients to a Seychelles or Bahamas entity where no scheme exists at all, while the FSCS logo remains on the homepage for everyone.

Why it changes the calculation

Compare two entities of the same brand. The UK one caps leverage at 30:1 and returns up to £85,000 if the firm collapses. The offshore one offers 500:1 and returns whatever an administrator can reconstruct from segregation records in a jurisdiction you cannot practically litigate in. The leverage difference is visible in the account; the protection difference is not.

Making a claim

Claims go directly to the FSCS, free of charge — claims management companies offering to do it for a percentage add nothing. Check eligibility on the scheme's own site, and check the firm's authorisation on the FCA Register before you deposit rather than after.