Savings: Change to compensation limits mean larger sums will soon be protected


FSCSChanges to the Financial Services Compensation Scheme (FSCS), will soon mean savers with large amounts of Cash held on deposit for a short period will receive a greater level of protection.

Savers are currently protected up to £85,000 per person, per institution, should a bank or building society go bust.

Joint accounts get cover of £170,000.

This means savers with large amounts of money on deposit tend to split their cash between a number of banks and building societies to ensure that it is fully protected. This practice is common place even if money will only be held on deposit for a relatively short period of time.

New Financial Services Compensation Scheme rules

However, from July the FCSC will amend the compensation rules so that balances of up to £1 million are covered for a period of up to six months.

The new rules are designed to specifically provide cover for those people holding large sums for a temporary period, for example following a house sale, retirement or divorce. If a claim is ever made the saver would have to prove that the money was only placed with the bank or building society for a temporary period.

For more information about the Financial Services Compensation Scheme, click here.