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Financial Compensation

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Declan Curry | 12:11 UK time, Monday, 6 October 2008

Some of you have been asking if small businesses are covered by the financial compensation scheme if banks go bust - in the same way that individuals are.

We asked the body that runs the scheme - the FSCS. This is its reply:

"FSCS was set up mainly to assist private individuals, although some smaller businesses are also covered. Larger businesses are generally excluded, although there are some exceptions to this (for example for claims in respect of certain compulsory insurances).

As an indicative guide only, for the purposes of deposit and investment claims, smaller companies are protected. A smaller company must meet two of the following criteria (as set out in section 247 of the Companies Act 1985 or section 382 of the Companies Act 2006 as applicable):
* Turnover: not more than £6.5 million
* Balance sheet total: not more than £3.26 million
* Total number of employees: not more than 50

For claims made under an insurance contract, small businesses are protected. A small business under the COMP rules is one that has an annual turnover of less than £1m.

The same levels of compensation apply whether the claimant is a private individual, small business, or a small company."

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