Who set up the Financial Services Compensation Scheme (FSCS)?

The Financial Services Compensation Scheme (FSCS) was established under the Financial Services and Markets Act 2000 (FSMA 2000). This Act was a crucial piece of legislation that restructured the regulation of financial services in the UK, leading to the establishment of the FSCS to protect consumers in cases where financial firms fail. The FSCS ensures that customers can receive compensation for their lost deposits, investments, and insurance claims up to specified limits when firms are unable to meet their obligations.

While other entities, such as the Financial Services Authority (FSA), the Bank of England, and the Prudential Regulation Authority (PRA), play important roles in the broader financial regulatory environment, they did not create the FSCS. The FSA was involved in its initial administration, but it was the legislative framework of FSMA 2000 that actually set up the FSCS and defined its purpose and function. This distinction clarifies the foundational role that FSMA 2000 holds in the establishment and regulation of the FSCS.