FSA to raise awareness of FSCS deposit protection scheme

The Financial Services Authority (FSA) is planning to make it obligatory for all banks, building societies and credit unions to prominently display how much compensation savers could claim if the provider went bust.

It should also display who will pay the redress which, in most cases, will be the Financial Services Compensation Scheme (FSCS).

This information would have to be shown in every branch and on all websites.

It is hoped proposed changes will reinforce existing deposit protection measures and will ensure customers can clearly see how much of their money is protected, how much is not and whether they are covered by the UK compensation scheme.

Recent research conducted by the FSCS to measure consumer awareness of the protection, found customer knowledge continues to be extremely poor, and has dipped since the economic crisis.

The proposals

The proposals published today will require each FSA-authorised bank or building society based in the UK to state that: "Your deposits are protected up to £85,000 by the Financial Services Compensation Scheme, the UK deposit protection scheme. Any deposits you hold above this amount are not covered."

Banks with branches in the UK, but headquartered and authorised in the European Economic Area (EEA) will have to state that deposits held with them "are not protected by the UK Financial Services Compensation Scheme".

These banks will also have to state which other national scheme is providing the protection.

Hector Sants, FSA chief executive, says: "It is vitally important that customers have confidence in the banking system and that is why we are taking this step of making it obligatory for firms to prominently display compensation information."