The Financial Services Compensation Scheme (FSCS) primarily aims to protect what demographic?

The Financial Services Compensation Scheme (FSCS) is designed to protect ordinary consumers of financial services, ensuring that they are safeguarded in case a financial institution fails or is unable to meet its obligations. The FSCS compensates individuals for lost deposits, investments, and certain types of insurance, up to specified limits, thus providing a safety net for consumers who may have limited knowledge or resources to navigate financial mishaps on their own.

This consumer-centric focus is crucial, especially given that individual customers may lack the sophistication, information, or power that larger corporations possess when it comes to managing financial risks. By specifically targeting ordinary consumers, the FSCS plays a vital role in maintaining public confidence in the financial system, encouraging individuals to engage with financial services without fear of losing their savings or investments due to institutional failures.