The investor compensation scheme for all investors
The investor compensation scheme protects and compensates investors in the event of the failure of their investment services provider (bank or investment firm), excluding those provided by portfolio management companies.
The investor compensation scheme covers all financial securities (stocks, bonds, units of UCITS, open-end investment companies (SICAV) or mutual funds (FCP), negotiable debt instruments) up to €70,000 per customer, per institution.
This guarantee is initiated when the investment services provider is no longer able to return to its customers the securities that they have entrusted to it.
In this way, the investor compensation scheme strengthens everyone's confidence in the stability of the financial system.
Go to the ACPR website for more information
Under what circumstances does the investor compensation scheme become effective?
The FGDR's investor compensation scheme is initiated when the ACPR determines that the service provider is no longer able to return to its customers the securities and other financial instruments and associated cash entrusted to it.
This implies that two conditions have been met simultaneously:
- the securities have disappeared from your accounts;
- the institution at which your account is held is in suspension of payments and cannot return or reimburse the securities.
In this case, the investor compensation scheme pays compensation based on the value of the financial instruments and cash that are no longer available to the customer.
The cash associated with the securities accounts is also compensated:
- included in the amounts covered by the deposit guarantee scheme up to €100,000, if your securities account is held by a bank;
- up to €70,000 if your securities, and therefore the associated cash account, are managed by an investment firm or investment services provider.
The investor compensation scheme does not cover possible changes in the market value of the securities or commercial disputes between the customer and the service provider (for example, relating to management of the portfolio).
→ Refer to the “Discover the compensation process/I own securities” section
How are investors protected when the account holder is not the beneficiary?
When the account holder is not the beneficiary (for example, multiple owners accounts opened by a professional), the account holder is not covered by the guarantee. The investor compensation scheme covers the beneficiaries, each of whom has a double compensation ceiling, provided these individuals are identifiable prior to the bank's failure.
Founding legislation of the investor compensation scheme
Law no. 96-597 of 2 July 1996, known as the “Financial Activity Modernisation Act”,
introduced the principle of an investor compensation scheme to protect investors' financial
securities in the event of the failure of their investment services provider.
In 1997, Directive no. 97/9/EC of the European Parliament and of the European Council
established the framework and harmonised at Community level the mechanisms that were
beginning to emerge.
The creation of an investor compensation scheme in France was included in Law no. 99-532
of 25 June 1999 on savings and financial security.
In late 2008, the Madoff affair, together with the role played by securities in the failure of US
bank Lehman Brothers, prompted a review of the 1997 directive. A proposal for revision was
filed by the European Commission in the summer of 2010.
To prevent the fraudulent use of financial instruments belonging to customers, French
regulations also require investment firms to keep financial instruments belonging to
customers and those belonging to the firm itself separate in their accounting system which is
How are the securities of an investor who is an individual business owner guaranteed?
If an individual business owner (craftsman, merchant, self-employed professional, etc.) conducts business through a separate legal entity, for example a one-person limited liability company (EURL), or under the status of limited liability individual business owner (EIRL), the securities and associated cash held in their business accounts are covered separately from their personal accounts.
The investor compensation scheme therefore covers the business owner’s securities accounts and cash held in the name of the EURL or EIRL, on the one hand, and their personal accounts, on the other.
How does the investor compensation scheme work for a joint signatory account or a partners' account?
- A “joint signatory account” is an account that belongs to a group of people (“undivided co-ownership”), none of whom may act independently of the others or claim ownership of a portion of the account so long as the undivided co-ownership exists.This type of account may include both securities and cash.
The guarantee covers the undivided co-ownership and not the portion belonging to each of its individual members.
- Account holders that have rights as partners of a company, members of an association or a similar group, and are not legal entities (for example, undeclared partnerships and similar groups), are treated as a separate investor.
They benefit collectively from a second compensation ceiling, in addition to the ceiling applicable to them individually.