CISI Professional Practice Exam 2025 – Complete Prep Guide

The primary function of the Financial Services Compensation Scheme (FSCS) is to protect consumers if a financial services firm fails. This protection is crucial because it ensures that consumers are safeguarded from losses resulting from the insolvency of financial institutions, such as banks, investment firms, and insurance companies. The FSCS pays compensation to eligible customers, which helps maintain public confidence in the financial system. By covering deposits, insurance policies, and investment losses up to certain limits, the FSCS plays a key role in financial stability and consumer trust.

In contrast, the other options relate to different aspects of the financial services landscape. Providing financial advice is not within the FSCS's remit, as its main focus is on compensation rather than advisory services. Regulating financial markets is the responsibility of regulatory bodies, such as the Financial Conduct Authority (FCA) in the UK, which oversee conduct and compliance within the industry. Similarly, assessing the performance of financial institutions falls under the purview of various regulatory and analytical entities, which monitor financial health and risk but do not offer consumer protection like the FSCS.