The Financial Services Compensation Scheme is the safety net most UK retail investors know about and almost no one looks at carefully until something goes wrong somewhere else and the question lands in their inbox. The headlines are reassuring — "your investments are protected up to £85,000" — and the reality is more nuanced than that single sentence implies.
This article is purely educational. It does not name any specific broker as risky. There is no current concern about any FCA-authorised UK platform that is the basis of this piece. The point is to give a self-directed UK investor a working understanding of what FSCS does and does not cover, how nominee structures and the FCA's CASS rules ringfence client money, and how to think clearly about per-firm exposure when you happen to hold across more than one platform.
This is not financial advice. Past performance does not guarantee future returns. Consider speaking to an FCA-authorised financial adviser for personalised guidance.
What FSCS actually covers (and doesn't)
FSCS is a statutory compensation scheme funded by levies on FCA-authorised firms. It steps in when an authorised firm fails and is unable to return clients' money or assets. There are different limits and rules depending on what kind of business the firm is doing.
For investments specifically, the relevant rules are:
- Cover applies only to FCA-authorised firms. A broker, platform or fund manager regulated by the FCA in the UK qualifies. Foreign brokers regulated under different regimes (Interactive Brokers' US entity, for example) are not FSCS-covered, though they will usually have an equivalent local scheme — SIPC in the US, with different limits and rules.
- The cap is £85,000 per person, per FCA-authorised firm. It is not £85,000 per account. If you hold an ISA and a SIPP at the same FCA-authorised firm, the cap is shared across both. If you hold the same kind of account at two different FCA-authorised firms, you have a £85,000 cap at each.
- Cover applies to a defined event. Specifically, FSCS pays out where an authorised firm "is unable, or likely to be unable, to pay claims against it" and the failure causes loss of money or investments. It does not cover losses from market movements, bad investment decisions or fund manager underperformance.
- There are different limits for different products. Cash deposits at a UK bank are protected to £85,000 per banking authorisation. Pensions advice and certain long-term insurance products have different caps and 100% cover regimes. The £85,000 figure for investments is the most commonly cited but is not universal.
The single most important misunderstanding to clear up: FSCS does not insure your portfolio against going down in value. It steps in if the firm holding your assets fails. If the FTSE drops 30% next week, no compensation scheme exists for that, and that is by design — it would not be a market otherwise.
Per-firm £85k cap
The £85,000 per-firm cap is widely understood at the headline level and widely misunderstood in the detail. Three points worth being precise about.
The cap is per firm, not per account. If you hold a Stocks and Shares ISA, a SIPP and a GIA at the same FCA-authorised firm, the protection across all three is capped at £85,000 for the firm — not £85,000 each.
It is per person. Joint accounts have a £170,000 cap (£85,000 per person). For a couple holding accounts in separate names at the same firm, each name has its own £85,000.
Authorisation, not brand, is what matters. Some platforms operate under multiple FCA authorisations, and conversely some brands sit under a single authorisation. The FCA Register at register.fca.org.uk is the canonical source for which firm has which authorisation. When two products you hold are under the same authorisation, the cap is shared; when they are under different authorisations, the caps stack.
The practical takeaway is that if you have meaningful balances spread across what feel like separate platforms, it is worth checking the FCA Register to confirm whether they actually count as separate firms for FSCS purposes. Not because of any specific worry about any particular firm — purely because the cap calculation is more nuanced than "one platform, one cap".
Nominee account structure
This is where most UK retail investors lose the thread, and it is the part that matters most for understanding why investments are usually safer than the headline £85,000 cap suggests.
When you buy a share, ETF or fund through a UK platform, the platform almost always holds it for you in a nominee account. The legal owner of record is a nominee company — typically a wholly-owned subsidiary of the platform whose only purpose is to hold client assets. You are the beneficial owner. The platform is the operator, but it is not the legal owner of your shares.
The nominee structure has a specific purpose: it ringfences your assets from the platform's own balance sheet. If the platform fails, its creditors do not get to claim against the nominee's assets, because those assets are not the platform's. They are yours and other clients', held by the nominee.
In a healthy administration process — which is what UK regulators have been planning for since the FCA's CASS regime was tightened post-2008 — clients' assets are identified, reconciled with the platform's records, and either returned or transferred to a successor platform. FSCS compensation kicks in only to cover the gap if reconciliation cannot complete and clients have actually lost assets.
This is why UK broker failures tend to result in clients moving to a successor platform with their holdings intact rather than receiving FSCS payouts. The nominee structure does most of the work; FSCS is the backstop.
FCA CASS rules and ringfenced client money
The FCA's Client Assets Sourcebook (CASS) is the rulebook that governs how authorised firms hold client money and client assets. The relevant chapters for self-directed investing are CASS 6 (custody assets) and CASS 7 (client money).
The headline rules:
- Client money must be held in segregated client bank accounts — separate from the firm's own operating accounts, at FCA-authorised banks, with daily reconciliation.
- Client assets (shares, ETFs, funds) must be held in custody arrangements that are clearly identified as belonging to clients, typically through nominee structures.
- Reconciliation must be performed on a defined schedule. Daily for client money, with documented procedures for resolving any discrepancies.
- The CASS auditor regime requires annual independent audits of CASS compliance, with reports submitted to the FCA. Failures of CASS compliance are taken seriously by the regulator.
The combination of CASS 6 and CASS 7 means that, in a well-run firm, client assets and client money are continuously identifiable and separate from the firm's own resources. This is the legal architecture that makes nominee accounts work in practice.
Where this can fail: if the firm has not been keeping accurate records, or has been mis-using client money to fund its own operations, or has been operating with a CASS audit qualification it failed to remediate. These are the scenarios where the nominee structure does not fully protect clients and FSCS compensation becomes more relevant. They are also the scenarios that the post-2008 FCA regime has been specifically designed to identify early.
Past UK broker failures
The UK has had broker and platform failures, though they are rare. Some educational reference points (none of which signals any current concern about any specific firm):
- Beaufort Securities (2018). A small UK broker that entered special administration. Clients' assets were generally returned, though the process was protracted and some clients had to engage with FSCS for shortfalls and administration costs.
- SVS Securities (2019). Another smaller broker, which entered special administration. Clients eventually received their assets back via a transfer to ITI Capital, though the process took time and there were administration costs that FSCS covered for affected clients.
- The wider picture. Larger established platforms have not failed in the modern UK self-directed era. Movements between platforms — for example, when Tilney and Bestinvest combined client books — are corporate actions rather than failures, and clients' positions transfer in the ordinary course of business.
The pattern in genuine failures is consistent: nominee structures generally do their job, clients eventually get their assets back or transferred, and FSCS covers shortfalls and administration costs up to the cap. The disruption is real — accounts are frozen during administration, transfers take weeks or months, and tax-year timing can become awkward — but the catastrophic loss scenarios that the £85,000 cap implies in the headline are uncommon in practice.
This is reference, not reassurance. Past patterns do not guarantee future patterns.
Pension protection
SIPPs are FCA-authorised investments and follow the £85,000 per firm FSCS cap on the investment side. The pension wrapper itself does not change the FSCS arithmetic.
There is a separate scheme — the Pension Protection Fund (PPF) — but that covers defined-benefit occupational pensions where the sponsoring employer fails, not self-invested personal pensions. PPF is not relevant to a typical SIPP.
A few practical points:
- A SIPP with multiple underlying investments at one platform is one £85,000 FSCS exposure for that platform. The fact that the SIPP holds twenty different funds does not multiply the cap.
- A SIPP wrapper provider and the platform that holds the underlying investments can be separate firms. Some SIPPs are administered by one FCA-authorised firm and the assets custodied by another. The FSCS cap applies at each authorisation point, but the administration scenarios get more complex.
- Older occupational pensions transferred into a SIPP are no longer PPF-protected. They become FSCS-scope investments. This is something to be aware of when considering DB-to-DC transfers — and a major reason regulated financial advice is required for transfers above defined thresholds.
For pensions specifically, the regulatory protections are layered, the rules vary by pension type, and the right answer for any individual depends on the specific structure. Speak to an FCA-authorised pensions adviser if the question is more than academic.
Crypto on FCA-authorised platforms
Crypto sits in an awkward spot in the FSCS framework. The headline:
- Most crypto holdings on most platforms are not FSCS-protected. The activity of holding cryptoassets for clients was not, until very recently, an FCA-regulated activity in the same way that holding shares is. That has been changing as the UK's crypto regulatory regime develops, but the current position is that an investor holding Bitcoin on a UK exchange should not assume FSCS cover.
- The FCA has been authorising crypto firms under specific permissions (cryptoasset registration for AML purposes, and now broader regulatory permissions as the regime expands). Authorisation does not automatically equal FSCS cover; the two are separate things.
- Some UK platforms hold cryptoassets via custody arrangements that resemble nominee structures. The legal position on whether these create the same client-asset protections as for shares is still developing.
The practical takeaway: if FSCS cover matters to you for a specific holding, check the platform's own disclosure of FSCS status for that product. Crypto exposure on most platforms today is at-risk in ways that share holdings on the same platform are not.
How aggregation tools display per-firm exposure
A wrapper-aware aggregation tool can do something that no individual broker app does: show you your total exposure to each FCA-authorised firm in one view. This is one of the more practical risk-management uses of an aggregation layer.
What a useful per-firm view looks like:
- Total assets at each FCA-authorised firm, summed across ISA, SIPP, GIA and any other accounts at the same firm.
- The firm's FCA registration number and authorisation type (so you can confirm it is genuinely a single firm rather than two brands under one authorisation).
- A visible threshold marker at £85,000 per firm — not because £85,000 is a hard ceiling, but because it is the FSCS reference point and a useful prompt for review.
- Notes on any holdings that are out-of-scope (crypto, foreign brokers, products held under regimes other than FCA investment authorisation).
None of this is "advice" — it is just transparency about the risk picture you already have. Given how many UK investors hold across two or three platforms by accident rather than by design, this is genuinely useful information that no single broker is in a position to show.
FAQ
Is my ISA covered by FSCS?
A Stocks and Shares ISA held with an FCA-authorised firm is FSCS-covered up to £85,000 per firm on the investment side. A Cash ISA held with a UK-authorised bank or building society is covered up to £85,000 per banking authorisation as a deposit. The two protections come from the same scheme but apply through different routes; the caps do not double up if both products are under the same authorisation.
What if I have £200k at one broker?
Your nominee-held shares and funds remain your assets in the firm's failure scenario, ringfenced under CASS rules, and would generally be returned or transferred to a successor platform. FSCS compensation kicks in to cover losses if reconciliation cannot return all assets, capped at £85,000 per person per firm. The cap is the backstop, not the headline coverage. That said, a balance well above the cap is a reason to understand the firm's CASS history and resolution arrangements, and a reason some investors choose to spread balances across multiple firms.
Are my shares safer than my cash at the same broker?
Generally yes, in the failure scenario. Shares held in a nominee account are ringfenced from the broker's own creditors and would be returned or transferred. Uninvested cash at a broker is held in a segregated client bank account at an FCA-authorised bank — also ringfenced, but exposed to the bank's own failure separately, with its own FSCS cap. In practice the protections are layered; in practice both are usually returned in full.
Has any UK broker actually failed?
Yes, though large established self-directed platforms have not. Small brokers — Beaufort Securities (2018), SVS Securities (2019) — have entered special administration. Clients' assets were generally returned, though the process was protracted and FSCS covered shortfalls and administration costs in some cases. The pattern is that nominee structures generally do their job; FSCS is the backstop, not the primary mechanism.
Does FSCS cover my SIPP?
The investments inside a SIPP are FSCS-covered up to £85,000 per FCA-authorised firm on the investment side. The pension wrapper itself does not change the cap. SIPPs are not covered by the Pension Protection Fund — that scheme is for defined-benefit occupational pensions. Where a SIPP administrator and the platform holding the underlying assets are separate firms, the cap applies at each authorisation; the administration scenarios get more complex and individual.
What about my crypto on Coinbase / Kraken UK?
Crypto holdings on most platforms are not currently FSCS-protected in the way share holdings are. The UK's crypto regulatory regime has been evolving and FCA registration for AML purposes is now common, but FCA registration does not automatically mean FSCS investment protection. Check the specific platform's disclosure for FSCS status on the specific product. The default working assumption is that crypto exposure is out-of-scope for FSCS.
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