The Financial Ombudsman Service handles complaints against authorised firms that are still trading. If an authorised firm goes bust while the Ombudsman is investigating claims against it, the claims would then be referred to the Financial Services Compensation Scheme, known as FSCS.

The FSCS pays compensation if a firm is unable, or likely to be unable, to pay claims against it because it has stopped trading or has been declared in default. European firms (authorised by their home state regulator) that operate in the UK may also be covered by the FSCS.

The FSCS protects:

1) Deposits

2) Insurance policies

3) Insurance broking (for business on or after 14 January 2005), including connected travel insurance where the policy is sold alongside a holiday or other related travel

4) Investment business

5) Home finance (for business on or after 31 October 2004).

This guide explains how the scheme operates, what dictates how much you have to cough up for failed firms, plus what protection is offered to clients who have assets on multiple platforms or with different products from the same provider.

Supporting material was provided by the Financial Services Compensation Scheme.