Money you’ve saved with providers that are part of the UK’s Financial Services Compensation Scheme (FSCS) is now protected up to £85,000 per institution – though banks and building societies don’t need to tell you about the updated figure till the end of June.
Update: This blog was published last month, but the information in it is accurate as of Tue 11 April.
The protection limit rose from £75,000 on 30 January 2017, but since several of you have got in touch, not aware the amount had increased.
This could be partly due to the fact that banks and building societies don’t have to update their marketing materials until 30 June 2017.
Indeed, on a spot check of bank branches near MSE Towers on Monday (13 March), Barclays, HSBC and NatWest were all still displaying posters mentioning the £75,000 limit in their windows.
We also checked the websites of several big banks and building societies, of which eight out of 14 still displayed the old limit (as of Tue 11 Apr, four of the 14 still display the old limit).
What is the FSCS?
The FSCS covers all UK-regulated current or savings accounts and cash ISAs with banks, building societies and credit unions.
It’s an independent fund set up by the Government and regulated by the Financial Conduct Authority; in the event of a bank collapsing, the scheme ensures you get some of your money back, though it’s likely you’ll lose access to the cash while compensation is being dished out.
The protection’s per institution, not account. So four accounts with one bank still only get £85,000’s worth. The definition of ‘institution’ depends on a bank’s licence and giant banking conglomerates make it complex.
For example, sister banks Halifax and Bank of Scotland’s accounts are only covered up to £85,000 combined. However, RBS and NatWest are also sisters, but their limits are SEPARATE. To check if your provider is protected, and whether it shares its limit, you can check the tool in our Safe Savings guide, or the one on the FSCS website.
Why did the limit increase?
Until 3 July 2015 the savings safety limit stood at £85,000 per person, per institution. It was reduced on 1 January 2016 to £75,000 to fall in line with the ‘EU Deposit Guarantee Schemes Directive’, which requires an adjustment every five years for member-state schemes to be equivalent to €100,000.
But the EU directive also requires an adjustment where there is significant fluctuation in exchange rates – and the pound’s post-Brexit fall prompted a review by the Bank of England. It then decided to raise the limit back to £85,000 so the UK can keep pace with the EU-wide protection limit of €100,000 (currently worth just over £87,000).
What if I’ve got a joint account?
Cash in joint accounts counts as half each, so together you’ve £170,000 protection.
If you also have an individual account with the same bank, half the joint savings count for your total exposure, and any amount over £85,000 isn’t protected.
For full information on the FSCS, including which banks are covered and the rules for temporary high deposits and investment products, see our Are Your Savings Safe? guide.