Investor compensation schemes in Europe – what they cover and what they don't

Every EU country must have an investor compensation scheme under the Investor Compensation Schemes Directive (97/9/EC). It is a last line of defence: it pays out when an investment firm fails and cannot give back what it holds for its clients. It is not insurance against losing trades.

#The EU minimum and the national top-ups

The directive sets a minimum of €20,000 per investor, and allows countries to cover only 90% of a claim. Many countries stick to that minimum; some go much further. A 2010 proposal to raise the EU floor to €50,000 was never adopted, so the differences remain.

#Three things decide whether you are covered

#1. The country of the firm's licence

Compensation follows the licence, not your residence. Clients of a Cyprus-licensed CFD broker are covered by the Cypriot Investor Compensation Fund (90% of the claim up to €20,000) wherever they live in the EEA. Clients of a Spanish investment firm are covered by FOGAIN up to €100,000. This is one of the few ways where "which EU licence" genuinely changes your protection – see our country guides.

#2. Whether the firm actually failed to return your assets

Most brokers must keep client money in segregated accounts at banks and hold securities in custody separately from their own assets. If a firm fails but segregation worked, an administrator returns client assets and the scheme may not need to pay at all, or only covers a shortfall. The scheme matters when segregation broke down – through fraud, error or a shortfall.

#3. Whether you are an eligible investor

Schemes protect retail investors. Many exclude professional clients, large companies and people connected with the failed firm. If you opted up to professional status to get higher leverage, check whether you are still covered.

#Deposit guarantees are a different safety net

Money held as a bank deposit is covered by the national deposit guarantee scheme, normally €100,000 per person per bank in the EU. In the UK the limit rose to £120,000 on 1 December 2025, while investment protection under the FSCS stays at £85,000. In Switzerland, bank deposits are protected up to CHF 100,000 and securities in custody are segregated by law.

When a broker is itself a bank – Saxo, Swissquote, Trade Republic or many of the banks in our register – your uninvested cash may be a deposit covered by the deposit guarantee, while your securities are held in custody. When the broker is an investment firm, it usually passes your cash to one or more banks as client money.

#Practical takeaways

• Prefer firms licensed in the EEA, UK or Switzerland; offshore licences come with no comparable scheme.
• If you hold a large balance with one broker, know which scheme applies and its limit. Spreading money across firms can make sense.
• Keep records: account statements, the client agreement and your correspondence make any claim much faster.
• Beware of anyone who contacts you offering to "recover" money from a failed broker for an upfront fee – genuine schemes never charge claimants. See recovery scams.

Read next: what happens if your broker goes bust.