Depositors Protected at Silicon Valley Bank

Following recent events at Silicon Valley Bank, the Financial Conduct Authority (FCA) recently issued its statement regarding the activities undertaken around the closure. In its most recent press release, the FCA informed that it has been working closely with the Bank of England, Prudential Regulation Authority (PRA), Financial Services Compensation Scheme (FSCS) and the UK Government to protect depositors of Silicon Valley Bank in the UK. 

As has been reported, The Bank of England (Bank), in consultation with the Prudential Regulation Authority (PRA), HM Treasury (HMT) and the Financial Conduct Authority (FCA), took the decision to sell Silicon Valley Bank UK Limited (SVB UK), the UK subsidiary of the US bank, to HSBC UK Bank Plc (HSBC) in order to continue operations at the bank as normal. The main story of interest for depositors here is the confirmation that depositors’ money is safe as a result of the transaction and continues to be protected by the Financial Services Compensation Scheme (FSCS).

So what is the FSCS and how does it protect consumers? 

The Financial Services Compensation Scheme (FSCS) is a UK government-backed compensation scheme that provides protection to consumers who have deposited money or investments with financial institutions that have become insolvent or unable to pay claims. It protects consumers in the following ways:

Deposit protection: The FSCS protects deposits up to £85,000 per person, per banking institution. This means that if a bank or building society goes bust, consumers will be compensated up to £85,000 of their deposits.

Investment protection: The FSCS also protects certain types of investments, such as stocks and shares, bonds, and unit trusts. The protection limit for investments is £85,000 per person, per institution.

Insurance protection: The FSCS provides protection to consumers who have purchased insurance policies from regulated insurance companies that are unable to meet their claims. The protection limit for insurance claims is 100% of the claim, with no upper limit.

Compensation for mis-selling and bad advice: The FSCS also provides compensation to consumers who have suffered losses due to the mis-selling of financial products or bad financial advice from regulated firms.

Overall then, good news for any customers of Silicon Valley Bank, who can be safe in the knowledge that business can operate as normal for them and their customers.