Financial Services Compensation Scheme (FSCS)
Guide to FSCS investment protection
The FSCS says its investment protection depends on the firm being authorised by the FCA or the PRA, and that it cannot accept claims for poor investment performance.
An investor compensation scheme is a safety net that some countries run for customers of failed or negligent financial firms. This page summarises what the UK scheme, the FSCS, publishes about investments and why authorisation matters. It does not assess any broker or promise that any trader would be covered.
What the FSCS Says About Investment Protection
On its guide to investment protection, the FSCS states: "If you take advice from an authorised financial adviser when investing, we can protect you." The page frames this protection around advice given by authorised firms, so the type of firm and the type of service both matter. Whether a particular claim qualifies is a matter for the scheme itself.
Why Authorisation Comes First
The same page tells readers: "Check your provider is authorised by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA)." An unauthorised firm sits outside this check, which is why how to check whether a broker is regulated is the first step on this site's list. Risks tied to firms without authorisation are covered in unregulated binary options brokers: risks regulators describe.
What the Scheme Does Not Cover
The FSCS says it cannot accept claims for poor investment performance. In plain terms, a compensation scheme is not insurance against trading losses, and a losing trade is not a reason for a claim. The page also refers to a compensation limit, which this page does not repeat; check the FSCS directly for current limits.
Binary Options and the UK
In the UK, the sale of binary options to retail consumers is prohibited, as set out in our guide to binary options in the United Kingdom. The FSCS page reviewed does not mention binary options, so this page cannot say whether any binary options product would fall within the scheme. For the broader picture, see binary options regulation explained and what FCA regulation means for binary options.
Frequently Asked Questions
Does the FSCS protect against losing trades?
The FSCS says it cannot accept claims for poor investment performance, so a losing trade is not on its own a basis for compensation.
Why does the FSCS tell people to check the provider is authorised?
The guide states: "Check your provider is authorised by the Financial Conduct Authority (FCA) or Prudential Regulation Authority (PRA)."
Does the FSCS page mention binary options?
The page reviewed does not mention binary options. Retail binary options sales are prohibited in the UK, and our UK guide explains the position.
Does this page address whether an individual could face liability?
This page summarises what the regulators' published guidance says. It does not address whether an individual could face liability. Seek independent legal advice.
Sources and Official References
- FSCS: Guide to FSCS investment protection (no date shown on the page)
This page summarises what the regulators' published guidance says. It does not address whether an individual could face liability. Seek independent legal advice.
This page summarises what the regulators' published guidance says. It does not address whether an individual could face liability. Seek independent legal advice.