The amount the Financial Services Compensation Scheme (FSCS) protects for deposits in banks, building societies and credit unions today increases from £75,000 back up to £85,000. Joint accounts will in turn benefit from the rise with a new limit of £170,000.
FSCS chief executive Mark Neale said: “The £85,000 limit protects about 98% of the UK public. More people will have more protection for more of their money.” The FSCS offers a protection checker for savers here.
The Bank of England’s Prudential Regulation Authority (PRA) reduced the protection limit on single accounts from £85,000 to £75,000 in July 2015 as part of a regular review.
Following last June’s vote that the UK should leave the European Union (EU), however, the value of the pound plunged against the euro and, in November, the PRA said restoring the limit of deposit protection was intended to provide a “measure of memorability and consistency”.
The FSCS protects consumer savings and investments in the event of a firm’s failure. According to EU regulations, non-euro member states are required to adjust their deposit protection limits every five years to the equivalent of €100,000. But significant fluctuations in currency may trigger further reviews.
Before consulting on the change last November, the PRA said it considered a structural shift in the exchange rate had occurred, adding: “These events were 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.”