Changes 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.