The FSCS - Financial Services Compensation Scheme

This page focuses on relevant information for Standard Life and Standard Life International customers. The Financial Services Compensation Scheme (FSCS) provides compensation to eligible customers where a financial services provider cannot meet its obligations and all other routes of maintaining the policy benefits have failed.

If you need further information on other types of financial services covered by the FSCS please visit www.fscs.org.uk

or call
0800 678 1100
or
020 7741 4100
Please note only compensation queries should be directed to the FSCS.

What would happen if an insurance company couldn’t pay its claims?

The Financial Services Compensation Scheme (FSCS) is the compensation fund of last resort for customers of authorised financial services firms. ‘Last resort’ means the FSCS will work with the FCA to seek other ways of maintaining customers’ benefits first, for example by finding another provider to take on parts of the defaulting firm's business.

There are specific EU rules which continue to apply to UK insurance companies on winding up – the Solvency II Directive 2009/138/EC. These rules mean that claims of policyholders against an authorised insurance company are paid before most other claims.

A policyholder may only be able to turn to the FSCS if there are insufficient assets remaining to meet their claims. An investigation by the FSCS will be carried out to establish the financial position of the insolvent company.

The FSCS was set up mainly to assist private individuals, although smaller companies and partnerships are also covered. It’s important to understand how any investments held under your contract are owned if you find yourself in the position of applying to the FSCS.

The FSCS is independent of the government and the financial industry, and there is no charge to policyholders to use its services.

Compensation levels and eligibility to claim

The availability of compensation depends on several factors:

  • The type and structure of the investments you choose within your investment products, such as pensions and bonds
  • Which company involved with your policy cannot meet its obligations. For example, is the insolvent company Standard Life or an external fund manager that manages a fund within your Standard Life product
  • The country the investments are held in
  • Whether you are resident in the UK at the time you took out the product. If you were not resident in the UK, you may be eligible for compensation from an equivalent scheme in the country you were resident in

The relevant compensation limits that would apply for an eligible policy if Standard Life was unable to meet its claims would usually be:

  • 100% of the value of the policy without limit

Some of our products offer investment in insured funds, mutual funds and deposits run by other financial companies. If one of these external companies is unable to meet its obligations:

  • FSCS compensation may be available for certain types of (but not all) pension contracts. This will be to an upper limit of £85,000 subject to certain conditions
  • No FSCS compensation would be available to investors in a life product such as a bond if one of these companies failed

The section ‘What would happen if a mutual fund manager were to default?’ covers other considerations in these cases. If one of our external fund manager partners were to fail, Standard Life would update you on the situation at that time.

Please bear in mind that the FSCS does not cover all situations. Please see 'Other compensation schemes' section for more details.

What would happen if a mutual fund manager were to default?

A fund manager is required to appoint a depository and custodian. One of the primary functions of the custodian is the safekeeping of securities and cash in deposit accounts, held in the name of the depository. This has the effect of segregating the funds from the fund manager’s own monies and effectively protects your investments should the fund manager become insolvent.

From your perspective this means that the only time they should need to look to the FSCS for compensation would be in the event of the fund manager acting dishonestly, fraudulently, or negligently.

The maximum level of compensation available for mutual fund investments is £85,000

This could also happen if you invested using the services of a Discretionary Investment Manager.

What would happen if a deposit-taker were to default?

The maximum level of compensation available is £85,000 per banking group. For people who hold multiple accounts in banks that are part of a larger group, then the level available will depend on the authorisation basis. If each of the banks is separately authorised by the FCA then the limit of £85,000 would apply per person per authorised institution. If each of the banks is not separately authorised then only one limit of £85,000 would apply, irrespective of how many different subsidiaries a person held accounts with.

Search for authorised banks, building societies and their subsidiaries 

Take a look at our example below, this is based on the current protected limit:

  • Denise has £110,000 deposited in a failed bank where the administrator could pay depositor creditors 60p in the £1
  • She will get £85,000 from the FSCS in a reasonably short time after the bank was declared 'in default'
  • Her full rights are assigned to the FSCS
  • The FSCS will eventually get £66,000 from the administrator (60% of £110,000)
  • Denise will then get part of her remaining loss at the recovery rate of 60% of the excess over the protected limit, i.e. 60% of £25,000 = £15,000
  • So, Denise will receive payments totalling £100,000 from the FSCS

These cases would be dependent on eligibility factors, refer to the Investor Protection page. 

Other UK compensation schemes

This is not intended to be an exhaustive list of compensation schemes, but to highlight the schemes that may apply to customers of Standard Life.

Financial Assistance Scheme

This is available to members of defined benefit (also known as final salary) schemes that started to wind up between 1 January 1997 and 5 April 2005, where the employer has become insolvent and the scheme is not able to pay out the full pension entitlement.

For further information please go to the Financial Assistance Scheme website 

Pension Protection Fund

This is available to members of defined benefit schemes where the employer has become insolvent after 5 April 2005 and the scheme is not able to pay out the full pension entitlement.

For further information please go to the Pension Protection Fund website 

Overseas compensation schemes

This is not intended to be an exhaustive list of overseas compensation schemes, but to highlight the schemes that may apply to customers of Standard Life. If a deposit account is based offshore then there is no compensation available from the FSCS - policyholders may need to look at a local scheme to see whether there is any protection available to them.

Ireland

Deposit accounts held with Irish banks and building societies may be covered by the Irish government’s guarantee.

For further information please go to the Central Bank of Ireland website 

International Bonds

It is important to understand that your Bond is not protected by the UK Financial Services Compensation Scheme (FSCS) if we are unable to meet our liabilities to you. There is no access to the FSCS if you have a pre-existing International Bond or plan to take out an International Bond in the future. 

You should note that there is no equivalent compensation scheme available in Ireland. However, the situation where Standard Life International would be unable to pay obligations meet policyholder liabilities is extremely unlikely.  Irish regulations protect policyholders by imposing strict capital requirements on insurance companies.  Under Solvency II, Standard Life International is subject to extensive obligations concerning the level of capital it must hold.

 Solvency Capital Requirements (SCR) represent the capital requirements that must be held in addition to policyholder liabilities.  At the end of 2022, Standard Life International had available capital of €766 million, which is well in excess of its SCR of €329 million (ratio of available capital to SCR of 233%). By holding more excess capital than SCR, the situation where Standard Life International would be unable to pay customer obligations is very low.

Please contact your Financial Adviser for further information. 

Jersey

Jersey has a Depositors Compensation Scheme which provides protection per person, per Jersey banking group.

For further information please go to the States of Jersey website 

Guernsey

Guernsey has a Depositors Compensation Scheme which provides protection per person, per licensed bank.

For further information please go to the Guernsey Banking Deposit Compensation Scheme website 

Isle of Man

The Isle of Man has a Depositors Compensation Scheme which provides protection per person, per licensed deposit taker.

For further information please go to the Isle of Man Financial Supervision Commission website