Introduction to Financial Services Compensation Scheme (FSCS)

As per the requirement of Financial Services Authority (FSA) & Financial Services Compensation Scheme Limited (FSCS), Banks are required to have in place, arrangements designed to assist the FSCS to ensure pay out of compensation to eligible depositors quickly and effectively within a seven day target.

As part of FSA Compliance requirements, Banks will be in a position to provide a report to Financial Services Compensation Scheme Limited to honour any customers claim as per the legal requirement. This is an ad-hoc report containing a record for every customer flagged as eligible for FSCS.

Banks need to flag their customers for eligibility as per the criteria stipulated by FSCS which also undertake spot checks to ensure compliance. A report is generated containing details of all deposits held by the customer singly or jointly and the eligible compensation amount.

The SCV file provided to FSCS contains only eligible depositors. However, the FSCS (and the Insolvency Practitioner) needs access to all customer data to deliver FSCS’s statutory responsibilities.

The below diagram sets out the different accounts and how they are treated:

Click here to understand the terms and abbreviations used in this functionality.