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?
The minimum threshold is set at European level by Article 4 of Directive 97/9/EC: at least 90% of your claim, up to a payout of €20,000. Any member state may protect more, and Italy does — the Fondo Nazionale di Garanzia pays up to €20,000 per investor, with no percentage deduction. Other schemes keep their own terms: the Cypriot ICF stops at 90%, the UK's FSCS applies a ceiling of its own, so the amount and the percentage for the scheme that actually covers your case we check separately. What holds true everywhere is a different point: the scheme steps in because an investment firm has been unable to return client money and financial instruments. It is not a guarantee of profit, and it does not cover losses from bad trades.
Two limits are worth stating up front, because they are the most frequent disappointment. The Fondo Nazionale di Garanzia covers only the intermediaries that belong to it — Italian and EU banks, SIM and SGR firms, European investment firms and their branches in Italy: an offshore or unlicensed platform falls under no scheme at all. And it steps in only where the intermediary is in insolvency proceedings and the client's claim has been admitted in them: having suffered a loss, or having had a withdrawal refused, is not enough.
Is this the same as bank deposit insurance?
No — and this is the most common confusion. Deposit protection (Directive 2014/49/EU) safeguards money held in a bank account, up to €100,000 per depositor, per bank. Investor compensation (Directive 97/9/EC) protects the money and financial instruments entrusted to 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: the civil claim against the broker remains open, and so does joining the criminal proceedings as a civil party to claim damages, if the case has got 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 on which the MiFID II Directive (2014/65/EU) is built 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.
