On 3 July 2015, the UK’s banking regulator, The Prudential Regulation Authority (PRA), announced that the level of depositor protection provided by the Financial Services Compensation Scheme (FSCS) is changing. As a result, the amount of savings protected under the FSCS with each individual bank or savings provider will reduce from £85,000 to £75,000 from 1 January 2016 for the majority of UK savers.
The FSCS depositor protection scheme provides valuable assurance to savers who deposit money with UK banks and institutions that their savings will be protected up to an agreed limit in the unlikely event that their savings provider should fail.
The amount of compensation is set under the European Deposit Guarantee Scheme Directive. This change to the depositor protection limit is the result of a regular recalculation that takes place every five years to make sure that the compensation amount stays at, or close to, the sterling amount equivalent of 100,000 Euros. It reflects the fact that the pound has gained in value relative to the Euro since the time the amount was last set.
Customers do not need to take any immediate action as a result of this announcement. We will try to contact all those who we believe need to take action as a result of the change ahead of 1 January 2016 to explain the implications for them. This will include the outcome of the PRA’s ongoing consultation on how customers who currently hold a balance of £85,000 can be dealt with.