Protection & safety · Jurisdiction DE

Investor compensation

Investor compensation applies in a compensation event: when BaFin determines that the firm cannot meet liabilities from securities business because of its financial situation. A loss of price is not such a case.

In more detail

As of the text of the Investor Compensation Act section 4: the claim is limited to 90 percent of the liabilities from securities transactions and to the equivalent of 20,000 euro. It concerns the failure of the firm, for example when money or units are not returned. The securities themselves remain the customer's property and can be claimed back in insolvency, as far as they are still there. BaFin separates this from deposit insurance.

Background

The Compensatory Fund of Securities Trading Companies is the scheme for many investment firms. Banks can be assigned to another protection system. Which system covers a named firm is not in Finmon. Bad advice and a lost price are not compensation under this statute. Deposit insurance is the neighbouring module, with a different amount and a different object of protection.

An example

A fund unit falls by half. That is a market result, not compensation. If the firm does not return the unit because it has misappropriated it, a compensation event can arise, capped at 90 percent and 20,000 euro. Finmon does not determine which case it is.

A common misconception

If the price falls, compensation pays the difference.

The price is market risk. Compensation concerns the failure of the firm, and even then only within the limits of section 4.

Source: AnlEntG § 4. Last reviewed: 2026-10-27. Editorially reviewed on 2026-10-27. Next review 2027-10-27. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.