The Bank of England is set to restore the savings protection limit to £85,000 per institution.
The Financial Services Compensation Scheme is a safety fund which provides individuals with a guarantee that their first £75,000 of savings in any UK-regulated bank account will be protected in the event of that financial institution going bust.
Now, the Bank of England has opened a consultation on raising this limit to £85,000 by 30 January next year.
What's the background to this?
Until 3 July 2015 the savings safety limit stood at £85,000 per person, per institution. It was then reduced to £75,000 to fall in line with the EU Deposit Guarantee Schemes Directive, which required an adjustment every five years for member state schemes to be equivalent to €100,000.
However, the EU directive also requires an adjustment where there is significant fluctuation in exchange rates.
Now, as a result of the UK's referendum vote on 23 June 2016 to leave the European Union, the Prudential Regulation Authority (PRA – part of the Bank of England) considers that the pound's fall – by more than 10 per cent – against the euro is so significant that the savings safety limit should be restored to £85,000.
Rates currently hover at around £1 = €0.86.
Can I respond to the consultation?
The PRA is inviting members of the public as well as firms for feedback on its proposals. It has published a detailed paper on the consultation and any feedback should be emailed to CP41_16@bankofengland.co.uk by Friday 16 December.
How can I find out if my savings are protected?
If you have more than £75,000 in savings, it's a good idea to spread the cash across different financial institutions to ensure your savings are protected in the unlikely event of a bank going bust.
But some banks such as Halifax and Bank of Scotland are linked – meaning you get just £75,000 protection in total across both.
Though other banks, which you'd think would be linked – such as Royal Bank of Scotland and NatWest – have separate £75,000 protection.
You can check how safe your savings are in our Safe Savings guide.