I own securities entrusted to an investment bank or an investment firm

Created on

The investor compensation scheme, a protection for all investors

The investor compensation scheme protects and compensates investors in the event of the failure of their authorised  provider (bank or investment firm). Securities and cash entrusted to a portfolio management company are protected by the guarantee of management services.  

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 bank or investment firmis no longer able to return to its customers the securities that they have entrusted to it. 
The investor compensation scheme strengthens everyone's confidence in the stability of the financial system.

Go to the ACPR website for more information.

All financial securities are covered by the investor compensation scheme

An authorized bank for this purpose or an investment firm merely has custody of securities and may be responsible for their management and for carrying out transactions (payment of dividends or redemptions, purchases/sales, new subscriptions). However, the customer remains the owner of the financial instruments at all times. The bank or the investment firm’s failure does not change this form of ownership. The customer remains the owner of the securities and has free access to them.

Stocks, bonds, units of investment funds, etc…all financial securities with no exclusions

Note: the investor compensation scheme is initiated only when two conditions are met:
The securities have disappeared from the accounts;
The institution at which the account is held is in suspension of payments and cannot return or reimburse the securities.

PRODUCTS COVERED BY THE INVESTOR COMPENSATION SCHEME

“FINANCIAL SECURITIES”, which include: 

  • equity securities (for example, listed or unlisted stocks, whether in registered or bearer form) issued by limited companies;
  • claims in the form of securities, issued by the State guarantee or a local government, a limited company or a securitisation fund, such as: 
    - fungible Treasury bonds (OAT), Treasury bills, bonds in any form,
    - negotiable debt instruments (TCN, including commercial paper and certificates of deposit);
  • units or shares of undertakings for collective investment such as: 
    - UCITS: open-end investment companies (SICAV), mutual funds (FCP) and real estate investment trusts (REIT).
    - UCITS: undertaking for collective investment in transferable securities
    - SICAV: open-end investment company
    - FCP: mutual fund
    - REIT: real estate investment trust

Securities are compensated up to €70,000 per customer, per institution regardless of the currency in which they are denominated.

The cash associated with securities accounts is also compensated:  

  • up to €70,000 if the institution at which your account is held is an investment firm and your account is denominated in euros or another currency of the EEA;
  • included in the other amounts covered up to €100,000 under the deposit guarantee scheme if the institution at which your account is held is a bank.

Note: the FGDR’s investor compensation scheme is initiated only when two conditions are met:

  1. the securities have disappeared from the accounts (fraud or computer system crash);
  2. the institution at which your account is held is in suspension of payments and cannot return or reimburse the securities.

 

€70 000

per customer, per institution for all financial securities

€70 000

per customer, per institution for cash when the provider is is an investment firm.

€100 000

included in the total deposits covered up to €100,000 per customer, per institution when the provider is a bank duly authorized for this purpose.

Protecting your accounts in the event that your bank fails
DOWNLOAD

Are financial securities covered regardless of the currency in which they are denominated?

A distinction must be made between the currency of the securities account and the currency of the associated cash account.

  • The investor compensation scheme covers all securities regardless of the currency in which the securities are denominated. However, the compensation paid for securities in foreign currencies will be calculated and converted into euros at the rate in effect on the unavailability date.

  • The FGDR’s investor compensation scheme covers cash accounts associated with securities accounts denominated in euros, CFP francs or in the currency of another State.
     

Compensation only if securities are not returned to the investor

All financial securities are covered by the FGDR’s investor compensation guarantee scheme, without exception. However, the investor compensation scheme is initiated only when two conditions are met: the securities have disappeared from the accounts and the institution that provided custodial services is no longer able to return or repay them to its customer.

 

What does “unable to return” the securities mean?

Under French law, the customer remains the owner of their securities at all times.
The bank or investment firm merely has custody of the securities and may be responsible for their management and for carrying out transactions (payment of dividends or redemptions, new subscriptions).

 

Focus Warning:

Important note about the investor compensation scheme:


The FGDR's investor compensation scheme applies only when the Prudential Supervision and Resolution Authority (ACPR) has determined that the service provider's financial situation prevents it from returning the securities.

The investor compensation scheme does not cover disputes between the customer and the institution resulting from the mismanagement of the customer's portfolio or changes in the value of securities as a result of market trends.

Moreover, any disagreement between the service provider and the customer as to whether securities are actually registered in the account is a commercial dispute between the parties.

What happens to securities if the institution that has custody of them fails?

The investment services provider's failure does not change this form of ownership. The customer remains the owner of the securities and has free access to them. 

The FGDR's investor compensation scheme becomes effective when the ACPR, after obtaining the opinion of the AMF,  determines that the service provider is no longer able to return to its customers the financial instruments entrusted to it. 

This implies that two conditions have been met simultaneously:

  • The customer, although the owner, no longer has access to the securities entrusted to the service provider: the securities are no longer in the account, they have disappeared;
  • In addition, the service provider's financial situation (suspension of payments) prevents it from returning the securities or paying back the customer.

The FGDR then intervenes through the investor compensation scheme to compensate the customer based on the value of the missing securities as of the unavailability date determined by the ACPR.
 


Under what circumstances can a bank or investment firm's failure cause securities to become unavailable? 

In practice, the unavailability of securities must be concurrent with the failure of the investment services provider (investment firm or bank). 

Securities may become unavailable in the following situations:

  • a serious failure of the computer systems of the service provider or one of its suppliers, which causes a high volume of securities to disappear;
  • the service provider's fraudulent conduct resulting in the misappropriation of customers' securities;
  • the improper conduct of the service provider who apparently used its customer's securities for purposes other than those for which it was authorised (for example, for lending/borrowing transactions).

Guaranteed compensation amounts for investors for compensation of their securities: up to €70,000 x 2 per customer, per institution

The securities in all the customer's securities accounts which are unavailable and eligible for the guarantee are assessed and added together to determine the base compensation amount. The FGDR pays compensation in this amount up to a maximum of €70,000 per customer, per institution (investment firm or bank).

A securities account must operate with an associated cash account to allow purchases and sales, payments of interest, dividends, etc. That is why the investor compensation scheme covers the securities themselves and the cash associated with the securities accounts.

The FGDR determines the total amount of the unavailable cash associated with the customer's securities accounts. It pays compensation for cash associated with securities accounts:

  • up to €70,000 if the investment services provider is an investment firm (and not a bank);
  • by adding this cash to all the other covered deposits of this same customer, up to the deposit guarantee scheme’s €100,000 ceiling, if the provider is a bank.
     

Investor compensation scheme of securities that benefits all customers of banks and investment firms

As a general rule, all customers of banks authorized and investment firms are covered by the investor compensation scheme.

The investor compensation scheme covers:

  • private individuals who are adults, minors, under guardianship or represented by a third party;
  • companies of any size regardless of their status, including limited companies (SA), limited liability companies (SARL), one-person limited liability companies (EURL), limited liability individual business owners (EIRL), etc. ;
  • associations, civil partnerships, foundations and other professional groups;
  • public institutions, local governments and their own institutions.

 
The scope of this coverage is designed to strengthen the public’s confidence in the financial system to the greatest possible extent. This is consistent with the objective of preserving financial stability.
 
However, the laws and regulations provide for some exceptions.


What investor guarantee scheme applies to an account whose holder is not the beneficial owner? 

When the holder of the securities account is not the beneficial owner (this is the case for collective accounts, omnibus accounts, segregated accounts opened by an investment services provider, or accounts opened in their own name by authorized professionals to hold assets received from their clients), the securities guarantee benefits the beneficial owners, with compensation for each of up to a ceiling of €70,000, independently of any compensation they may otherwise be entitled to as direct clients of the institution that has defaulted, and provided that they are identified or identifiable before its default.
 

Exceptions: what customers are excluded from the investor compensation scheme?

The following are not covered by the scheme that covers securities or financial instruments:

  • States, central governments, local authorities, and their agencies or cooperative associations, as well as supranational institutions;
  •  all companies and entities in the financial sector, including credit institutions, investment firms, undertakings for collective investment in transferable securities (UCITS), pension funds, and other financial institutions;
  •  insurance companies; 
  • individuals on trial for money laundering.

 

How does the investor compensation scheme work for a joint account? 

A joint securities account is shared equally among the co-holders unless otherwise specified in the account agreement. Each co-holder combines their share of the joint account with their other personal securities accounts.
 
Practical case in relation to: Example of compensation for joint securities accounts:
Let's assume a joint securities account held by Person A and Person B in the total amount of €9,000.
Person A also has a securities account and the securities are valued at €6,000.

  • The compensation paid to Person A is €6,000 + one-half of €9,000 = €10,500;
  • The compensation paid to Person B is one-half of €9,000, i.e. €4,500. 

The compensation paid to the co-holders for the cash associated with the securities accounts is calculated in the same way. 

The name of a joint account generally includes the words “Person A or Person B”. The account can be opened for more than two people.

faq fgdr

FAQ

How are deposits to a joint signatory account or a partners' account guaranteed?

A joint signatory account is an account that belongs to a group of people who together form an “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.

The deposit guarantee scheme 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 an undivided co-ownership, and therefore as a depositor separate from the partners or members. 		 They therefore benefit from a collective compensation ceiling of €100,000 for the accounts in question, in addition to the ceiling applicable to them individually.

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.

LEARN MORE

la guarantee c the investor guarantee scheme

 

What Investor Compensation i Scheme [SG1] [MC2] applies to an account whose holder is not the beneficial owner?

[SG1] CC June 2026

[MC2] done

 

cav : Le patrimoine professionnel d’un ’entrepreneur individuel (artisan, commerçant, profession libérale, etc.) qui exerce son activité professionnelle dans le cadre d’un statut d’Entrepreneur Individuel à Responsabilité Limitée (EIRL ), est réputé distinct de son patrimoine personne. Ses titres et espèces associées placés sur ses comptes professionnels sont couverts séparément des comptes personnels

par rapport a ca : The professional assets of an individual business owner (craftsman, merchant, self-employed professional, etc.) who 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), are deemed separate from their personal assets. Their securities and associated cash held in their business accounts are covered separately from their personal accounts.

.

The founding texts of the investor compensation scheme.


Law No. 96-597 of 2 July 1996, known as the "law on the modernization of financial activities," established the principle of the investor compensation scheme, to protect investors' financial securities against the failure of their authorized bank or investment firm.
In 1997, Directive No. 97/9/EC of the European Parliament and of the Council established the framework and harmonized, at the EU level, the schemes that were beginning to emerge.


The implementation of the investor compensation scheme, in France was established through Law No. 99-532 of 25 June 1999 on savings and financial security, and through the Order of 18 March 2024 on the implementation of tthe investor compensation scheme, the compensation ceiling, and the terms of application of Article L.322-3 of the CMF (Code Monétaire et Financier - Monetary and Financial Code).

 

The founding texts of the securities guarantee

Law No. 96-597 of 2 July 1996, known as the "law on the modernization of financial activities," established the principle of a securities guarantee to protect investors' financial securities against the failure of their authorized bank or investment firm.

In 1997, Directive No. 97/9/EC of the European Parliament and of the Council established the framework and harmonized, at the EU level, the schemes that were beginning to emerge.

The implementation of the securities guarantee in France was established through Law No. 99-532 of 25 June 1999 on savings and financial security, and through the Order of 18 March 2024 on the implementation of the securities guarantee, the compensation ceiling, and the terms of application of Article L.322-3 of the CMF (Code Monétaire et Financier — Monetary and Financial Code).

You may also be interested in

I own securities: compensation process

Discover

Check if my bank is protected

Discover