Post Office savers to get full UK protection

All their deposits will be covered by the UK's Financial Services Compensation Scheme (FSCS) from 1 November, subject to High Court approval (see the Safe Savings guide).

This means the first £50,000 per person will be protected if Bank of Ireland (BoI), the institution that runs the Post Office's savings arm, goes bust.

BoI is setting up a UK subsidiary, Bank of Ireland (UK) PLC, to house all Post Office savings cash and all deposits from its customers in Northern Ireland.

It is currently based in Ireland so falls under the local scheme which guarantees the first €100,000 (£83,000).

While that limit is higher than the UK cap, doubts have been expressed over the safety of the Irish economy, though fears have dampened over the past year (see the Irish Banks worry MSE News story).

Protection boost

As well as the £50,000 UK protection, Post Office savers will have any further deposits up to their current €100,000 limit protected by the Irish government until the end of this year.

In January, all UK savers will have the sterling equivalent of €100,000 protected by the FSCS (see the Savings boost MSE News story).

Martin Lewis, MoneySavingExpert.com creator, says: "This is great news. For the last few years, while Punjabi National and the First Bank of Nigeria both have full UK protection, Post Office savers needed to rely on another country's scheme.

"This was especially damaging because of the confusion between Post Office-branded savings and products it sells from NS&I, the 100% safe government-owned institution. "Having met the Post Office and strongly lobbied that it undermined the trust consumers should have in their savings, I was delighted when I heard the change would happen.

"Fingers crossed it pulls out some cracking rates in the future as, with this change, there are no negatives to putting cash there."

Further reading/Key links

Best rates: Top Savings, Top Fixed SavingsStay safe: Safe Savings