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Do you know if your investments are protected?

Which? survey reveals lack of knowledge

Just one in three of those we asked knew that investments were protected by the FSCS

The majority of the public aren’t aware of the safeguards in place should an investment firm collapse, according to new Which? research. 

We surveyed 1,692 people in November 2016 and found that only one in three (32%) of them realised that investments fall under the remit of the Financial Services Compensation Scheme (FSCS).

What’s more, just 4% of people knew the maximum level of compensation is £50,000 per investment firm.

Harry Rose, editor of Which? Money, said: ‘With record low returns on cash savings, more people will be turning to other types of investments and should know there is a safety net in place should the worst happen. 

‘Investment firms, the regulator and the FSCS itself should be doing more to help investors understand how their money is protected.’

Find out more: how to keep your savings safe – ensure your savings get the maximum possible protection  

What protections are in place for investors?

Two-thirds (67%) of people we surveyed knew that deposits with a bank or building society are protected.

The compensation rules for investments are more complicated than they are for bank deposits, but investment firms, the Financial Conduct Authority and the FSCS aren’t doing enough to help improve understanding of the protections in place for investors.

In general:

  • You’ll get £50,000 FSCS protection for negligent investment and fraud. The FSCS can cover losses up to £50,000, but only if the rogue investment firm or adviser is unable to meet claims against it.
  • You’ll get £50,000 FSCS protection when an authorised investment firm goes out of business and cannot return your money.
  • You’ll get £150,000 ombudsman protection if the firm is still operating. The Financial Ombudsman Service will investigate your complaint and can force the financial firm or adviser to compensate you up to £150,000 plus interest.
  • You’ll get no protection if your investments have performed badly. The FSCS doesn’t cover losses on the stock market – that’s the risk you take as an investor.

Test your knowledge

Take our short quiz to find out how much you know about your compensation rights when a financial firm goes bust. 

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