Brexit and FSCS protection

The Financial Services Compensation Scheme (FSCS) provides compensation and protection to customers of authorised financial services firms that have failed.

FSCS protection for UK-based customers of UK authorised firms will not change as a result of the UK leaving the European Union (EU). This means that in most cases existing FSCS protection will continue, including after the Brexit transition period ends at 11pm GMT on 31 December 2020.

However, FSCS protection may change if a customer and/or their firm is based in the European Economic Area (EEA). The EEA includes EU countries and also Iceland, Liechtenstein and Norway.

For information about FSCS protection for your financial services product, please contact your firm directly.

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set the rules and scope of FSCS protection. The PRA and FCA have published the rules that will apply after the end of the Brexit transition period. The following questions and answers are based on these rules.

FSCS protection for Deposits

FSCS protection for deposits will depend on a number of factors including where the firm is authorised and in which jurisdiction the firm holds your deposits. Check with your firm for more information. If you receive a letter from your firm telling you that you are now protected by FSCS you do not need to take any action.

My deposit is held with a UK branch of a UK bank/building society/credit union. Will FSCS protect my money after the Brexit transition period ends on 31 December 2020?
Yes. Eligible deposits held by UK authorised banks, building societies and credit unions in the UK will be protected by the FSCS after 31 December 2020 (assuming the firm continues to be UK authorised). FSCS protection is not dependent upon the depositor’s place of residence, but where the bank, building society or credit union holds the deposit. If a deposit is held by a branch in the UK, FSCS protection applies (unless it is a branch of a Gibraltarian firm, in which case, protection would be the responsibility of the deposit guarantee scheme in Gibraltar).

Your bank, building society and credit union are required to provide you with an annual information sheet that describes your depositor protection. Check with your firm for more information.

My deposit is held with a UK branch of an EEA bank. Will I still be protected after the Brexit transition period ends on 31 December 2020?
Yes, UK branches of EEA authorised deposit-taking firms (e.g. an EEA bank) will become UK authorised and members of the FSCS. If these firms hold their customers’ deposits in the UK, eligible deposits will become FSCS protected up to £85,000 after 31 December 2020.

Deposits held in UK branches of Gibraltarian-based firms are treated differently and depositor protection will remain the responsibility of the Gibraltar deposit guarantee scheme.

My deposit is held with an EEA branch of an EEA bank. Will I still be protected after the Brexit transition period ends on 31 December 2020?
Depositors who bank with EEA-authorised firms in the EEA should not see their deposit protection change – they should currently be covered by an EEA deposit guarantee scheme, which will continue after 31 December 2020.

Please contact your firm for more information or visit the European Forum of Deposit Insurers for a full list of EEA deposit protection schemes.

My deposit is held with an EEA branch of a UK firm and am currently protected by the FSCS. Will I still be protected after the Brexit transition period ends on 31 December 2020?
From 11pm GMT on 31 December 2020, deposit protection previously provided by the FSCS for deposits held in EEA branches of UK firms will cease. However, you should become protected by an EEA deposit guarantee scheme instead, but this will depend upon rules in each EEA jurisdiction. Any change in, or loss of, protection should be notified to customers by firms.

Eligible deposits held in Gibraltarian branches of UK firms are treated differently and will continue to be protected by the FSCS after 31 December 2020.

Please contact your firm for more information or visit the European Forum of Deposit Insurers for a full list of EEA deposit protection schemes.

Will the FSCS deposit protection limit of £85,000 be affected by or revised after Brexit?
There are currently no plans to revise the FSCS deposit protection limit.

FSCS protection for Investments

I live in the UK and I’m a customer of an EEA authorised investment firm. Will I be protected after the Brexit transition period ends on 31 December 2020?
UK based customers of EEA authorised investment firms operating in the UK are protected by EEA compensation schemes. After 31 December 2020, FSCS protection will be extended to customers of firms with UK branches, equivalent to the cover provided to customers of UK firms.  This is to provide certainty to UK customers. Customers of EEA authorised firms without a UK branch will not have access to the FSCS, other than where there is existing FSCS cover in respect of the activities of certain incoming fund managers.

I live in the EEA and I’m a customer of a UK branch of a UK authorised firm. Will I be FSCS protected after the Brexit transition period ends on 31 December 2020?
FSCS does not have any residency requirements for making an investment claim. For customers of a UK branch or establishment of a UK authorised investment firm, if you were FSCS-protected prior to 31 December 2020, you will continue to be FSCS protected after this date. 

I’m a customer of a local EEA branch of a UK authorised firm, will I be FSCS protected after the Brexit transition period ends on 31 December 2020?
Probably not. In most cases, FSCS will no longer be able to protect customers of EEA branches of UK authorised firms that default (e.g. become insolvent) after the UK leaves the EU.  You may, however, be covered by the local investor compensation scheme – customers should check directly with their provider.

FSCS protection for Insurance Policies

FSCS protection for insurance policies following the end of the Brexit transition period on 31 December 2020 will depend on a number of factors, including whether your insurer remains authorised in the UK, the location through which the policy was issued, the location of the risk you’ve insured, and whether the policy was issued before or after 31 December 2020.  Check with your firm for more information.

My insurance policy was issued by a UK insurer prior to 31 December 2020, am I still FSCS-protected?
If your insurance policy was FSCS-protected prior to 31 December 2020, it will remain FSCS-protected after this date, as long as your insurer remains a UK authorised insurer. 

Some insurers have transferred their EEA-related business to non-UK authorised insurers to enable the policies to continue to be serviced after the UK leaves the EU. In that case, FSCS protection will only be available for insured events that occurred prior to the transfer.

Please contact your insurer for any questions relating to FSCS coverage for your insurance policy. 

My insurance policy was issued by an EEA insurer prior to 31 December 2020, am I still FSCS-protected?
If your insurance policy was FSCS-protected prior to 31 December 2020, that policy will generally remain FSCS-protected after this date as long as the policy remains in place (and is not reissued) and as long as the insurer remains a ‘relevant person’ in the UK. 

Transitional arrangements have been introduced so that after 31 December 2020, most EEA insurers who insured UK risks prior to Brexit will remain ‘relevant persons’ at least temporarily, allowing time for other arrangements to be made if necessary.  Please check with your insurer for further details of their position.

My insurance policy is issued by a UK/EEA insurer after 31 December 2020, am I still FSCS-protected?
Depending upon the location of the insurer’s branch through which the policy is issued and the type of UK authorisation status held by the insurer, policies issued after 31 December 2020 in respect of risks in the UK, Channel Islands, Isle of Man and Gibraltar may be eligible for FSCS protection.  For example, if issued through a UK branch, an eligible policy in respect of risks in the UK, Channel Islands, Isle of Man and Gibraltar will be FSCS protected, as before. 

An insurance policy issued after 31 December 2020 in respect of EEA risks will not be FSCS-protected, regardless of the location of the firm’s branch through which the policy is issued. 

If an EEA insurer that is using the transitional arrangements after 31 December 2020 to set up a UK branch issues a policy through an EEA branch, only UK risks can be FSCS-protected.

Please contact your provider for any questions relating to FSCS coverage for your insurance policy. 

How is reissue or renewal of an insurance policy treated?
Reissue or renewal of an insurance policy (e.g. an annual renewal) will count as a new issue.  If this occurs after 31 December 2020, then the approach in question 3 (above) for issue after 31 December 2020 will generally apply.

What will amount to a ‘reissue’ will depend on the terms of the policy and the facts in each case, but minor and/or administrative changes to a policy generally will not count as a reissue.

How do I know if my insurance policy was FSCS-protected prior to 31 December 2020?
FSCS is only able to consider the eligibility of specific insurance policies in the event of an actual insurer default.  There are a number of eligibility criteria to be met. If you’re unsure whether your insurance policy was protected prior to 31 December 2020, please check with your insurer.  You may also wish to seek independent financial/legal advice.

Where FSCS-protection applies to an insurance policy, how much am I covered for?
For more information on FSCS’s insurance protection, including applicable limits, see our insurance pages.

Where can I find more information about the UK’s temporary arrangements for EEA insurers that apply after 31 December 2020?
For more information on the temporary arrangements for EEA insurers see the Bank of England's EU withdrawal pages.

Information for firms

The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) set the rules and scope of FSCS protection and have published the rules that will apply after the Brexit transition period ends on 31 December 2020.

Further information can be found at:

www.bankofengland.co.uk/eu-withdrawal

www.fca.org.uk/brexit