In welcome news for savers, the UK’s banking watchdog has increased the amount of money it can protect.
If you are currently considering banking options or seeking savings advice in Oswestry or Cheshire, the Prudential Regulation Authority (PRA) has raised its protection limit to £120,000. Previously, only £85,000 was protected in the event of a provider failing. This is the maximum amount a customer will be covered for if their lender collapses.
The figure was revised in line with inflation, following Bank of England consultations earlier this year. The Financial Services Compensation Scheme (FSCS) was originally introduced in 2001, as part of the Financial Services and Markets Act 2000, when it was set up to consolidate numerous sector-wide compensation schemes. The £85,000 limit was established in 2010 as part of the European Deposit Guarantee Schemes Directive. This required all EU member states, which included the UK at the time, to protect deposits up to this amount or equivalent.
Additionally, the cap for selected temporary high balance claims is also increasing, from £1 million to £1.4 million, effective December 1st. This will cover the sale or purchase of property, as well as insurance policy payouts. At present, the financial services industry funds the FSCS via different classes of industry levies. These pay towards compensation payments and FSCS service costs. The government and taxpayers are not liable.
Commenting on the latest changes, PRA CEO Sam Woods said they will help reassure the British public about the safety of their money in the banking system.
