Recent reports in the media have suggested that the FSCS plans to cut the compensation cover for investments. This is inaccurate. The FSCS has no plans to reduce compensation protection for investments as suggested, nor is it able to do so. The rules that the FSCS applies when assessing clams are made by the FSA. These include rules that set the FSCS compensation limits. The FSCS cannot depart from these rules.
The FSCS compensation limit for investment claims is currently £50,000 per person, per authorised firm. The European Commission is considering harmonisation of compensation limits across Europe to €50,000 for investment claims. This proposal is currently set out in a draft directive which is subject to debate amongst member States. A final decision has not yet been made by the Commission.
The currrent limit for deposits is £50,000. The FSCS limit for deposits will increase on 31 December 2010 following European legislation. The FSA plans to issue a consultation shortly on increasing the coverage limit to the equivalent of €100,000 .
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