BoE plans to restore FSCS deposit protection limit to £85,000

Posted on 07 December, 2016

The Bank of England’s PRA is consulting on plans to restore the limit of protection provided by the FSCS to depositors of PRA-authorised firms from £75,000 to £85,000 on 30 January 2017.

Firms would have until 30 June 2017 to implement the necessary changes to systems and materials.

The PRA says restoring the limit to £85,000 – the level in effect for almost five years prior to 3 July 2015 – will provide a measure of memorability and consistency.

The limit was previously reduced to £75,000 because the Deposit Guarantee Schemes Directive required non-euro Member States of the European Union to adjust their deposit protection limits on 3 July 2015 to the equivalent of €100,000.

The Directive also requires that limits be adjusted outside of the five-year review cycle following the occurrence of unforeseen events such as currency fluctuations.

The PRA says the developments in financial markets following the referendum vote, including with respect to the GBP/EUR exchange rate, have caused a structural shift in the exchange rate which was unforeseen when the UK limit was reduced in 2015.

The PRA will continue to monitor fluctuations in the exchange rate but, barring unforeseen events, will seek to avoid making further adjustments to the deposit protection limit.