Would You Prioritise FSCS Protection or Choose a Better Platform Despite Exceeding the £85k Limit?

whitehobbit1

BACKGROUND: FSCS Protection Limits

The Financial Services Compensation Scheme (FSCS) currently protects up to £85,000 per person, per authorised financial institution. This includes:

- Cash in savings accounts  
- Assets held in Stocks and Shares ISAs  
- Pensions (e.g. SIPPs)  
- Investment accounts  

...as long as the firm is authorised by the Financial Conduct Authority (FCA).

The Prudential Regulation Authority has proposed increasing this limit to £110,000 from 1 December 2025, but until then, the £85,000 cap remains in force.


KEY CLARIFICATION: FSCS Applies Per Authorised Firm, Not Per Account

The FSCS limit is based on the authorised firm, not per product or account. This means that if you hold multiple accounts (e.g. an ISA and a pension) with the same FCA-authorised entity, they are covered collectively up to £85,000 in total — not individually.

Here are a few practical examples:

Example 1 – Halifax & Bank of Scotland (under Lloyds Banking Group)
If you hold £50,000 in Halifax and £50,000 in Bank of Scotland, only £85,000 would be protected. The remaining £15,000 would be unprotected because both banks operate under the same banking licence via Lloyds Banking Group.  

I understand that Lloyds is widely regarded as financially sound, but bankruptcy — while unlikely — is not impossible. If Lloyds were to go under, you could lose the portion above the £85,000 threshold.

Example 2 – Vanguard
If you hold a Stocks & Shares ISA and a SIPP with Vanguard Investor, both products fall under Vanguard Asset Management Ltd, so the FSCS limit still applies to the total value across both accounts, not individually.

Example 3 – Trading 212
Even if you have both a Cash ISA and a Stocks ISA with Trading 212, the £85,000 FSCS cap still applies in total, because both are under Trading 212 UK Ltd.

General Rule of Thumb
To benefit from full FSCS protection across larger balances, you must spread your funds across separate FCA-authorised firms, each with their own distinct banking licence.


MY SITUATION

I'm currently planning to:

- Transfer my Investment ISA from Barclays Smart Investor to Vanguard Investor, primarily to avoid Barclays' high management fees and invest in the FTSE Global All Cap Index Fund (VAFTGAG).
- Transfer my pension pot from Aegon to Vanguard due to lower fees, better customer experience, and historically stronger long-term returns. I have 15+ years until retirement.

Combined, these accounts will likely exceed £85,000 in value, all held under Vanguard Asset Management Ltd. This would leave part of my investments unprotected by FSCS.


MY QUESTION

Would you be strict about keeping all your money within the £85,000 FSCS protection limit per financial institution, or would you be comfortable exceeding it if the firm is reputable, cost-effective, and offers strong long-term performance?

Specifically:

- Is full FSCS protection your top priority, or do you think it's acceptable to exceed the limit for the sake of lower fees, platform quality, and investment returns?
- If you're willing to exceed the FSCS cap, by how much?  
  – Would you go 100% with the better platform?  
  – Or would you apply a personal cap (e.g. £150k or £200k per institution) to manage risk?
- How do you personally balance risk management vs investment efficiency when choosing a platform?

I'd appreciate any thoughts, experiences, or strategies from those who've had to weigh up FSCS protection versus long-term growth.

EthicsGradient

For investing, I pay no attention to the FSCS limit. I don't have more than £85k cash with an investment platform at any one time, and the investments are held in trust for the investors, rather than being assets of the investment platform, If a platform fails, there may be delays in getting money out, but it's not clear the FSCS would resolve that.

Malchester

I go institution by institution, I have  more in Lloyds than the £85000 and am OK about it. I don't have an account with Tempo but would not go over the £85000 figure with them.

masonic

I don't know how much in investments would be sufficient for the loss due to missing assets and administration costs to exceed £85k. If you stick to popular mainstream funds and one of the big investment platforms, then even a high 6-figure sum is probably not risking losses of that magnitude due to the platform provider failing. The most likely scenario would be a simple takeover by another platform, which would incur little cost per investor.

I have two S&S ISAs, for access reasons rather than FSCS compensation reasons. If one provider fails I will still be able to transact on the other if needed. I cannot access my SIPP for quite a while anyway due to my age.

I would not exceed the £85k compensation limit for cash deposits, but then again I would not see the need to hold £85k in cash in total.

Albermarle

The question about FSCS compensation for investment platforms is asked regularly on the forum.

If a platform goes bust your investments are unaffected directly. Indirectly there would probably be some short term problem accessing the investments, whilst the administrators sorted things out, or more likely sold the platform to a competitor ( which would probably happen before they went bust anyway). The £85K would go to pay any costs in dealing with the administration, or any holes in the accounts.
So your actual level of investment in the platform is really not that relevant. Many people hold 7 figure sums with one platform, and many more will have hundreds of thousands. One caveat being that they were mainstream platforms and not niche/small players.

You might take into account that if Vanguard were to go bust, then it would mean we were in the middle of a financial/nuclear? Armageddon, so FCSC would be the last thing on your mind.  

dunstonh

I pay no attention to FSCS protection with investments but then I only use well capitalised platforms, that are cash positive with trading with low illiquid assets.  I don't venture into the unknown.