The Financial Services Compensation Scheme (FSCS) is the UK's statutory last-resort compensation fund for customers of failed authorised financial services firms. It is one of the most important consumer protections in the UK financial system — and one of the most frequently misunderstood. This article explains what the £85,000 limit actually protects, what it does not protect, and what happens to your ISA investments if your platform fails.
What the FSCS is
The FSCS was established under the Financial Services and Markets Act 2000. When an authorised firm fails and cannot pay claims against it, the FSCS steps in to compensate eligible claimants — up to the applicable limit. It is funded by a levy on authorised firms; claimants do not pay to access it.
The FSCS covers several categories of financial product: deposits, investment business, insurance, home finance (mortgages), and debt management. The limits differ by category. For deposit protection — the category most relevant to cash held in a bank or savings account — the limit is £85,000 per eligible depositor per authorised firm.
What "£85,000 per authorised firm" means in practice
The £85,000 limit applies per eligible depositor per authorised firm — not per account. If you hold £100,000 in a single bank account, £85,000 is protected and £15,000 is not, regardless of whether you have one account or ten accounts with the same bank. If you hold £85,000 with Bank A and £85,000 with Bank B, both are fully protected — because they are different authorised firms.
This has implications for how you structure your finances across providers. A Wealth8 ISA account and a current account at your bank are held at different authorised firms — each has its own FSCS protection up to the limit.
How FSCS applies to your Wealth8 ISA
This is where the distinction between deposits and investments matters. When you hold cash in your Wealth8 account — money awaiting investment, or proceeds following a sale — that cash is an eligible deposit. It is protected up to £85,000 per eligible depositor under FSCS deposit protection rules.
When you are invested — your money held in Sharia-screened equities and Sukuk within your ISA — those holdings are investment products, not deposits. The FSCS does not protect against market losses on investments. If your portfolio falls in value because markets declined, that is market risk, and the FSCS does not compensate you for it.
What the FSCS does protect against, for investments, is firm failure. If Wealth8 were to become insolvent and client assets were found to be missing or misappropriated — a separate problem from market loss — the FSCS investment protection limit applies. For investment business, the FSCS covers up to £85,000 per eligible claimant.
Segregated custody and why it matters separately from FSCS
There is an important protection that sits alongside FSCS and is arguably more relevant for investment accounts: segregated custody under FCA Client Assets Sourcebook (CASS) rules. Wealth8 holds client assets with a UK-registered FCA-authorised custodian in segregated accounts clearly identified as belonging to clients — not in Wealth8's own name. This means that if Wealth8 were to fail, your investment holdings are not available to Wealth8's creditors. A separate administrator would facilitate transfer of those assets to another authorised firm.
In practice, for most firm failures, it is the CASS segregation that returns client assets — not FSCS compensation. The FSCS for investments is a backstop for the unusual scenario where assets are missing from segregated custody. The two protections complement each other.
What is not protected
The FSCS does not protect against: market losses (price falls in your investments), bad investment decisions (choosing the wrong portfolio), foreign exchange losses, or losses on products from unauthorised firms. If you invest with an offshore platform that is not FCA-authorised, there is no FSCS protection regardless of what the platform may claim.
This is one reason the distinction between UK-regulated and offshore halal investment products matters. An offshore halal platform may have genuine Sharia credentials; it may have no credible consumer protection backstop. FSCS protection is a UK benefit that comes with FCA authorisation — it is not portable.
This article is for informational purposes only. FSCS limits are correct as of 2026 — visit fscs.org.uk for current information. Capital at risk. FSCS does not protect against market losses on investment products.