Brexit and UK Financial Services Compensation Scheme 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 ended 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.

The FCCS published some FAQs as follows:

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.

https://www.fscs.org.uk/about-us/brexit/