Quick answer: The Financial Services Compensation Scheme (FSCS) is the UK’s safety net if an authorised financial firm goes out of business and can’t pay what it owes you. For bad pension advice, it can pay up to £85,000 per person, per firm. It is free to claim, and you don’t need anyone to claim for you.
What is the FSCS?
The FSCS is an independent, free service set up by Parliament. It is paid for by a levy on the financial firms it protects. It steps in only when an FCA- or PRA-authorised firm has failed, meaning it has stopped trading and can’t pay claims against it.
Think of it as an insurance policy that the whole financial industry pays into, so customers aren’t left with nothing when a firm collapses.
How much is protected
| What you had | Usual FSCS protection |
|---|---|
| Bad pension or investment advice from a firm that has failed | Up to £85,000 per person, per firm |
| A personal pension or annuity with an insurance company that fails | Usually 100%, with no upper limit |
| A SIPP whose operator fails | Up to £85,000 per person, per firm |
| Savings in a UK bank or building society that fails | Up to £120,000 per person, per bank |
Limits for firms that failed from 1 April 2019 (advice and investments) and from 1 December 2025 (savings). Older failures may have lower limits. Source: FSCS.
What the FSCS doesn’t cover
- Investments that simply fall in value. Losses from normal market ups and downs aren’t compensation.
- Firms that are still trading. Complain to the firm, then the Financial Ombudsman Service.
- Firms that were never authorised. This is a key reason to check the FCA Register first.
- Final salary workplace pensions. If the employer goes bust, the Pension Protection Fund may pay compensation instead.
How to claim
- Check the firm has been declared in default. The FSCS lists the firms it is dealing with. In many cases it will contact customers itself.
- Claim directly with the FSCS. It is free. Have your paperwork ready, such as letters, statements and any recommendation reports.
- The FSCS assesses your claim. If it agrees you lost out, it pays compensation up to the limit.
Frequently asked questions
Is my pension protected by the FSCS?
It depends on the type of pension and who failed. Most personal pensions with insurers are protected at 100%. Bad advice is protected up to £85,000 per person, per firm. Final salary workplace schemes are covered by the Pension Protection Fund instead.
Is my State Pension protected?
The State Pension is paid by the government, so it isn’t affected by a financial firm failing.
Do I need a claims company?
No. Claiming directly from the FSCS is free, and it will help you through the process.
What if the firm hasn’t gone out of business?
Then the FSCS can’t help. Complain to the firm first, and then to the Financial Ombudsman Service if you aren’t happy with its answer.
Does the £85,000 limit apply per pension?
No. It applies per person, per failed firm. If you had claims against two separate failed firms, each would have its own limit.
Related guides
- What is the FCA, and why does it matter to you?
- The Financial Ombudsman Service explained
- Check a firm or adviser on the FCA Register
- How to spot a pension scam
Going to the official FSCS website
You can check whether your firm has failed and start a claim on the FSCS website, or call it free on 0800 678 1100.
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