Post Office savers will no longer rely on the Irish government to protect their cash from tomorrow.

All deposits will be covered by the UK's Financial Services Compensation Scheme (FSCS) from 1 November (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. From 31 December the protection level rises to £85,000 in line with the rise for all UK banks.

BoI has set 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.

As things stand before tomorrow's switchover, Post Office savings fall under the main BoI licence in Ireland. For protection purposes, it falls under the local scheme which guarantees the first €100,000 (£85,000).

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

Protection boost

Martin Lewis, 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 Savings
Stay safe: Safe Savings