If you have money in a bank or building society savings account, current account or with a credit union, your money is likely to be protected by the UK’s savings compensation scheme. If the bank, building society or credit union goes bust, how do you make your claim?
1. Check that you’re covered by the Financial Services Compensation Scheme
If your bank, building society or credit union goes bust, you should check that you can make a claim against the Financial Services Compensation Scheme. The FSCS can only help you if the firm you have savings or investments with is regulated by the Financial Conduct authority and is ‘in default’. This means that it’s gone bust and that it doesn’t have enough assets to pay its customers.
SAVVY TIP: I’ve written an article called Which UK banks are protected by the Financial Services Compensation Scheme?
The quickest way to get a response is to call the Financial Services Compensation Scheme on a freephone number of 0800 678 1100 or 0207 741 4100. If you have the name and address of your bank etc, they can tell you whether your savings are covered by the FSCS.
SAVVY TIP: If you prefer, you can contact the FSCS by filling in an email contact form.
2. You may be contacted by the FSCS directly
If your bank etc were to go bust, you may be contacted directly by the Financial Services Compensation Scheme. When a firm that’s covered by the FSCS goes bust, the organisation often proactively tries to contact the bank or building society’s customers rather than waiting for them to get in touch. However, it will only do this once the bank etc has been declared ‘in default’.
3. You should try and claim compensation as soon as possible
If a financial company you’ve saved with goes bust and it is in default, you should try and get your claim for compensation to the Financial Services Compensation Scheme as soon as you can.
SAVVY TIP: There are no time limits set by the FSCS by which you have to make a claim for compensation, but there may be legal limits after which claims won’t be dealt with.
4. You could receive your compensation within seven days
The FSCS aims to pay compensation to people who have savings and whose bank, building society or credit union goes bust, within seven days if the case is straightforward. If it’s more complicated, it could take up to 20 days.
5. It should be quite quick to declare a bank ‘in default’
Once a firm has been declared in default, things can move quite quickly. With some investment firms, declaring them ‘in default’ can take a long time. But with banks and building societies, this should be quite quick.
SAVVY TIP: If you are in financial difficulty or hardship, you should tell the Financial Services Compensation Scheme and they will try and process your claim as quickly as possible.
6. You don’t need to use a solicitor or claims firm
You can make a claim directly to the Financial Services Compensation Scheme. You don’t need to employ a professional to help you with your claim. It’s also free of charge to use the Financial Services Compensation Scheme.
7. The upper limits include savings and any interest
You are covered for up to £85,000 saved with any one bank or building society or group of banks/building societies that are regulated as one group. This £85,000 figure includes any interest you have earned on your savings as well as the original amount you saved.
8. Loans or mortgages aren’t deducted from compensation
If you have a loan or mortgage with the same bank that you have savings with, you receive the savings compensation in full. The amount of any loan isn’t taken off the total.
9. Money on prepaid cards isn’t protected by the FSCS
Although money in a savings or current account is protected by the FSCS (as long as the organisation is regulated by the Financial Conduct Authority), money you may have on a prepaid card isn’t covered by the compensation scheme.
10. Money in joint accounts will be assumed to be owned 50:50
If you’re making a claim for money you’ve lost from a joint account because the bank or building society has gone bust, the FSCS will assume it’s owned 50:50 between you and the other account holder, unless you have evidence that says otherwise. This is the case even if you and the other account holder have split up or separated.
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