Compensation schemes: the five questions I'm asked every single time
These five questions come up, almost word for word, on nearly every call. Here are straight answers — with none of the "it depends" where the answer is genuinely simple.
How much will I get?
At least 90% of your claim, up to a payout of €20,000 — that is the minimum threshold set across the entire EU (Article 4, Directive 97/9/EC). An individual member state may set a higher ceiling or cover the loss in full; the exact figure and percentage for your particular scheme — EdW, FSCS, ICF or another — we check separately, because they vary. The key point: the scheme compensates you when an investment firm has failed to return client assets. It is not a guarantee of profit, and it does not cover losses from bad trades.
Is this the same as bank deposit insurance?
No — and this is the most common confusion. Deposit protection (Directive 2014/49/EU) safeguards money in a bank account, up to €100,000. Investor compensation (Directive 97/9/EC) protects the client assets held by an investment firm or broker when that firm cannot return them due to insolvency or fraud. Different threshold, different scheme, different application.
How long do I have to file a claim?
The deadline is set by the specific national scheme, and it is strict: miss it, and your claim will no longer be considered under that procedure — even where the loss is entirely real. Don't wait for the outcome of a criminal case or a civil suit before applying to the scheme; these proceedings run in parallel, not one after the other.
A compensation scheme is a floor, not a ceiling. It guarantees a minimum no matter how tangled the case — which is precisely why you shouldn't wait for everything else to be resolved before claiming that minimum.
The scheme rejected my claim. Is that the end?
No. A refusal can be challenged — either through the scheme's own internal review, or before an administrative or civil court, depending on the country and the type of scheme. A rejection by the scheme also doesn't close off other routes: a civil claim against the broker, or a claim within criminal asset confiscation if the case has developed that far. One route being refused is not a verdict on the whole matter.
My broker is licensed in another EU country. Where do I file?
With the scheme of the country where the broker obtained its licence — not the country where you live. The "home-state supervision" principle in MiFID II (Directive 2014/65/EU) means that a client in Italy who traded through a Cypriot or German broker is protected by the Cypriot or German scheme, and that is where the claim goes. The first step is always the same: establish exactly who issued the licence, and work out the deadlines and the filing address from there.
