Jurisdiction(s):
European Union

EU Investor Compensation Schemes Directive (97/9/EC): scope, eligibility and exclusions, funding, coverage levels, cross-border top-ups, payout triggers and sanctions; UK FSCS context

Published by a LexisNexis EU Law expert

Practice notes

Background to the

The (EC) 97/9 (ICSD) is one of two existing EU guarantee scheme directives. The other, the Deposit Guarantee Schemes Directive (DGSD), is discussed in Practice Note Deposit Guarantee Schemes Directive. Collectively, these directives require Member States to establish, respectively, depositor and investor protection schemes, providing minimum levels and scope of cover to customers of DGSD- and ICSD-covered firms. Under the ICSD, Member States must set up one or more investor compensation schemes (ICSs) operating within its territory. Investment firms that deliver investment services must be members of such a scheme. ICSs are designed as a last-resort safety net, safeguarding investors against losses where an investment firm cannot repay money or return assets held for investors. They are not intended to cover investment risk: for example, where an investor has acquired shares which then fall in value. Until the UK withdrew from the EU, it met its obligations under the ICSD and the DGSD through the Financial Services Compensation Scheme (FSCS). For further information on the FSCS, see Practice Note The Financial Services Compensation Scheme.

Funding of an ICS

Although the ICSD does not specify how Member States are to fund an ICS,...

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Web page updated on 21/05/2026

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