The level of protection for individual savers with money in banks and building societies that go bust will increase to £85,000, the Financial Services Compensation Scheme (FSCS) has confirmed.
From Monday 30 January the amount of cash the FSCS will protect is to increase by £10,000 for single bank accounts, while customers with joint accounts will see their level of protection rise to £170,000 from £150,000.
The decision to raise the protection limit was made in light of the falling value of the pound, so that the UK can keep pace with the EU-wide protection limit of €100,000 (£87,000).
According to the FSCS, the increased limit means 98% of UK savers will be covered by the scheme.
A consultation on the increase in the threshold was launched in November last year after the pound fell following June's Brexit vote. At the time, the Prudential Regulation Authority (PRA – part of the Bank of England) considered the decreasing value was significant enough to increase the value of protection.
What's the FSCS?
It's a legal body that serves as the last resort for customers of financial services firms who have lost money.
Essentially, the scheme steps in on cases where a saver has a deposit but their bank or building society can't physically provide them with their money. If this is the case the saver can make a claim through the FSCS, which will compensate them for this loss.