Your rights when a company goes bust
A company you’ve paid collapses — a retailer holding your deposit, an airline you’ve booked with, a firm you’ve a gift card for. It feels like your money’s gone. Often, it isn’t: the UK has several safety nets, and the one that protects you depends on how you paid and what you bought. Knowing which to reach for turns panic into a claim form.
This is information, not financial advice. It explains the main protections when a business becomes insolvent.
First: how did you pay?
The way you paid is usually your strongest protection.
- Credit card, £100–£30,000: Section 75 of the Consumer Credit Act makes your card provider jointly liable with the retailer. If the company can’t deliver, you can claim the money back from your card company — even if the business has folded. You only need to have put part of the cost (even a deposit) on the card to be covered for the full amount.
- Debit card, or under £100 / over £30,000: chargeback may help. It’s a scheme run by the card networks (Visa, Mastercard) rather than a legal right, but your bank can reverse the payment. There are time limits — typically you should claim within 120 days of the problem — so act promptly.
- Bank transfer, cash, cheque or voucher: the weakest position. You’d usually become an unsecured creditor of the failed company and join the queue — often getting little or nothing back. This is exactly why a credit card is worth using for big or risky purchases.
Booked a holiday or flights?
Travel has its own protections:
- ATOL covers most package holidays and flight-inclusive trips. If the firm fails, you’re refunded if you haven’t travelled, or flown home if you’re already away. Look for the ATOL logo and certificate.
- ABTA covers many other travel arrangements (like coach or rail packages) and offers help if a member goes bust.
- A flight-only booking made directly with an airline isn’t ATOL-protected — which is another reason to pay by credit card.
Money in a bank, building society or with an insurer?
If a financial firm itself fails, the Financial Services Compensation Scheme (FSCS) steps in:
- Savings: protected up to £85,000 per person, per banking licence (and up to £1 million for six months for a “temporary high balance”, like just after a house sale).
- Insurance and pensions: the FSCS also covers many of these, often at 90–100%.
It’s automatic and free — but note the limit is per banking licence, and some brands share one, so very large savers should spread money across separate institutions.
What to do if it happens
- Don’t panic, and gather proof — order confirmations, receipts, card statements, booking references.
- Identify your route — card payment (Section 75 or chargeback), travel booking (ATOL/ABTA), or a failed financial firm (FSCS).
- Make the claim — with your card provider, the ATOL scheme, or the FSCS. Keep copies of everything.
- Watch the clock — chargeback in particular has tight deadlines.
The lesson that runs through all of it: how you pay is a form of insurance. For anything large, a deposit or booking made on a credit card buys you Section 75 protection for nothing — which is why it’s worth doing even if you clear the balance straight away.
Last checked 31 July 2026. Section 75 covers purchases over £100 up to £30,000; FSCS savings protection is £85,000 per banking licence.
Sources
Just so you know: this guide is information and journalism, not financial advice, and we don't recommend specific financial products. Your circumstances are your own — if you need personal advice, speak to a suitably qualified adviser. Information was correct at the "last updated" date above but things change; always check the linked primary sources.