The ability of business and charitable organisations to claim under the Financial Services Compensation Scheme (FSCS) is dictated by the legal nature of the entity.
Depositor Compensation
The FSCS arrangements apply only to deposits with a Financial Services Authority (FSA) authorised bank and there are rules covering multiple deposits with the same authorised institution or ‘brand’. The current list of banks can be found on the FSA website. Guidance on multiple accounts can be found on the FSCS website.
Subject to the foregoing, under the FSCS arrangements, compensation is available for client accounts up to the current limit of £50,000 (£100,000 for joint accounts) providing the client is:
- an individual;
- a sole trader;
- a small partnership (ie net assets not exceeding £1.4M); or
- a company or LLP that meets the Companies Act 2006 definition of ‘small’.
Unincorporated charities which do not have net assets exceeding £1.4m and small (as noted above) incorporated charities would be able to claim. Specific guidance can be found at www.fscs.org.uk. Charities should also refer to the guidance issued via the Office of The Scottish Charity Regulator.
Credit Unions concerned about their own deposits and potential liability to investing members should refer to www.fscs.org.uk.
The above article first appeared in Technical Bulletin Issue 96. More details about the Technical Bulletin can be found here.