Protection for you

We're part of the Financial Services Compensation Scheme (FSCS). The scheme is set-up to protect you.

If we get into financial difficulties which may affect our ability to pay your claim, you may be eligible to receive compensation under the FSCS.

  • The FSCS is an independent body set up by the UK Government to provide compensation or some other form of resolution for people where their authorised financial services provider gets into financial difficulties and becomes unable, or unlikely to be able, to pay any claims. This circumstance is widely referred to as being 'in default'.
  • It is important for you to be aware that you may not always be able to make a claim under the FSCS, and there are also limitations in the amount of compensation you may receive.
  • Any compensation available will depend on your eligibility, the type of financial product or service involved, the investment funds selected (if applicable) and the circumstances of the claim.
  • Losses, which may result from poor investment performance, are not covered by the FSCS.

FSCS's mission is to provide a trusted compensation service for customers, which raises public confidence in the financial services industry.

FSCS is the UK’s statutory fund of last resort for customers of authorised financial services firms. This means it can pay compensation if a firm is unable, or likely to be unable, to pay claims against it. FSCS is a non-profit-making independent body, created under the Financial Services and Markets Act 2000 (FSMA). It is funded by levies on authorised financial services firms. FSCS does not charge individual consumers.

Is Prudential covered by the Financial Services Compensation Scheme (FSCS)?

Yes. The Prudential Assurance Company Limited (PACL) and other UK authorised and regulated firms in M&G plc are subject to the FSCS. You may be able to make a claim if Prudential is unable to meet its financial obligations.

Is Prudential International Assurance Company covered by the Financial Services Compensation Scheme?

Prudential International Assurance (PIA) is authorised by the Central Bank of Ireland and is subject to limited regulation by the Financial Conduct Authority for UK Business.

For eligible policyholders habitually resident in the UK the FSCS would apply for policies taken out on or after 1 December 2001.

Policyholders holding a UK policy, issued before 2001, may be eligible to make a claim before the FSCS, however, since such a policy would have been taken out before the FSCS regime commenced, they should check their eligibility directly with the FSCS.

Are there limits to the compensation payable by the FSCS?

Yes. The FSCS operates different levels of compensation. The scope and amount of cover available depends on the type of policy involved and the funds selected.

Where does FSCS protection apply?

There is full FSCS coverage if PACL is ‘in default’.

  • Your bond or pension is protected up to 100% of the value of your claim.
  • Any funds you choose to hold in your bond or pension will be included in the value of your claim in the event that PACL is declared ‘in default’.
  • If you hold the Prudential With-Profits funds or PruFund funds (where they’re options available to you) in your bond or pension, they are protected 100% in the event of the default of PACL.

All the other funds we offer, apart from those mentioned above, are unit-linked, and invest in other funds managed by  non-PACL fund managers.  FSCS cover does not apply if the non-PACL fund manager were to be ‘in default’.

  • There is no FSCS cover for unit-linked funds investing with non-PACL fund managers if that manager were to be ‘in default’.

Where does FSCS protection apply?

There is FSCS coverage if PACL is ‘in default’. 

  • PACL is the operator of the Prudential Retirement Account, so if PACL defaults as operator of the  personal pension plan you are protected up to £85,000. 
  • If you hold the Prudential PruFund  funds in  the Prudential Retirement Account, then they’re protected up to 100% in the event of PACL being ‘in default’

Any further FSCS cover depends on where you invest.

  • A collective fund (often called an Open Ended Investment Company or OEIC) -  These funds are protected up to £85,000 per person per firm ‘in default’.
  • Stocks & shares investments (Stocktrade) - Fully protected up to £85,000 per person, per firm ‘in default’.
  • Cash Account (HSBC) - Fully protected up to £85,000 per person, per deposit group.

Where does FSCS protection apply?

There is full FSCS coverage if PACL is ‘in default’.

  • Your product is protected up to 100% of the value of your claim.
  • Any investments you choose to hold in your product will be included in the value of your claim in the event that PACL is declared ‘in default’.
  • If you hold the Prudential With-Profits fund or PruFund funds in your product, they are all protected 100% in the event of the default of PACL.

Other investment options are not protected by the FSCS.

  • All the other Prudential funds we offer (you’ll know these if the name starts ‘Prudential’), apart from those mentioned above, are unit-linked and invest with non-PACL fund managers, so FSCS cover does not apply if that fund manager were to be ‘in default’.
  • And the FRP Holding Account, and any investment in the Self-Invested Fund, (see your Key Features Document for more information) are also not protected.

Where does FSCS protection apply?

There is FSCS coverage if PACL is ‘in default’. 

  • If you hold the Prudential PruFund  funds, then they’re protected 100% in the event of PACL being ‘in default’.

The ISA Terms and Conditions explain the cover applicable for other funds available through the Prudential ISA.

Where does FSCS protection apply?

If Prudential International Assurance plc was deemed to be ‘in default’, FSCS cover would apply for eligible policyholders habitually resident in the UK for policies taken out on or after 1 December 2001. Policyholders holding a UK policy, issued before 2001, may be eligible to make a claim before the FSCS, however, since such a policy would have been taken out before the FSCS commenced, they should check their eligibility directly with the FSCS.

By investing in a PIA contract, PIA invest your money in funds that are provided by third party fund managers (i.e. non-M&G plc fund managers and fund managers within M&G plc, including the Prudential Assurance Company Limited). In such circumstances, you would not be protected by FSCS should these funds or the related fund management companies be deemed to be in default.

However, if PIA is in default, the value of any investment held in these funds would still form part of a claim under the FSCS for an eligible policyholder habitually resident in the UK.

Where does FSCS protection apply?

There is full FSCS coverage if PACL is ‘in default’.

  • Your pension is protected up to 100% of the value of your claim.
  • Any funds you choose to hold in your pension will be included in the value of your claim in the event that PACL is declared ‘in default’.
  • If you hold the Prudential With-Profits fund or Deposit fund (where they’re options available to you) in your pension, they are protected 100% in the event of the default of PACL.

All the other funds we offer, apart from those mentioned above, are unit-linked, and invest in other funds managed by  non-PACL fund managers.  FSCS cover does not apply if the non-PACL fund manager were to be ‘in default’.

  • There is no FSCS cover for unit-linked funds investing with non-PACL fund managers if that manager were to be ‘in default’.

Annuities

  • 100% of the claim with no upper limit for the claim amount.

Investments (e.g. Unit Trusts, Open Ended Investment Companies and Stocks & Shares ISAs)

  • 100% but limited to £85,000 per person, per firm in default.

Investment & Home finance advice (e.g. investment planning and mortgage advice). 

  • 100% but limited to £85,000 per person, per firm in default.

General insurance policies

  • 90% of a claim with no upper limit.
  • Compulsory insurance, such as car insurance, for policies started on or after 14 January 2005, is fully covered with no upper limit.

Deposits

The FSCS would pay compensation up to the limit of £85,000 per person, per authorised deposit Group (bank, building society and credit unions). Since 3 July 2015, the FSCS provides a £1 million protection limit for temporary high balances held with your bank, building society or credit union if it fails.

Where FSCS coverage does not apply, then other factors can come in

FSCS doesn’t cover every situation. For example unit-linked funds that invest in the funds of non-PACL/PIA fund managers (often called ‘mirror’ funds).

But, where FSCS protection does not apply, there are other factors that could help if the worst happened and a provider was ‘in default’. For example, the use of custodians or depositories to provide protection for fund assets, where there is separate legal ownership of assets and legal entities that aren’t liable for any losses of a fund manager. In so doing, the intention is that the underlying fund will not be liable for any losses the underlying fund management company incurs.

PACL/PIA would aim to recover any money invested in an underlying fund where the fund manager has been declared ‘in default’, but PACL/PIA would not be liable for any loss incurred from the default of the non-PACL/PIA fund manager.

Brexit and FSCS protection

What a Brexit implementation period means
The UK left the EU at 23:00 GMT on 31 January 2020, and has entered an implementation period, which is due to operate until 31 December 2020.

During the implementation period, EU law and EU-derived domestic law will continue to apply. Passporting of firms between the UK and the EU will continue, as will consumer rights and protections derived from EU law. New EU legislation that takes effect before the end of the implementation period will also apply to the UK.

What this means for FSCS
As a result of the implementation period, FSCS expects there will be no changes to the scope of its protection before 31 December 2020 resulting from the UK’s exit from the EU.

More information about the FSCS

The Financial Services Compensation Scheme
PO Box 300
Mitcheldean
GL17 1DY

Or call the FSCS: Telephone: 0800 678 1100

Website: www.fscs.org.uk