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Banks ordered to better publicise saver protection

Banks ordered to better publicise saver protection

Category: Savings

Updated: 17/12/2012
First Published: 28/05/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Banks, building societies and credit unions will soon have to prominently display posters and stickers in branches and on websites explaining which deposit guarantee scheme applies to their customers' deposits.

The Financial Services Authority (FSA) has revealed the new rules, first mooted in December last year, will take effect from 31 August this year.

Savings with banks and building societies covered by the UK 's Financial Services Compensation Scheme (FSCS) are protected to the tune of £85,000 per customer per bank.

However, some banks operating on these shores are effectively UK branches of an overseas bank and are not covered by the FSCS.

Indeed, savings in branches of banks from the European Economic Area (EEA) are covered by the bank's national scheme instead.

In this instance, European legislation means the cover amounts to €100,000, which when converted into sterling, is currently the equivalent of around £80,000.

When the new rules come into play, UK branches of a foreign bank from the EEA will have to display posters confirming that its customers are not covered by the FSCS.

In this case they would have to specify which national scheme will provide protection.

"Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure," said Andrew Bailey, FSA director of UK banks and building societies.

"Too many people assume that because their branch is located on a local high street in the UK , they are covered by the FSCS. This is not true for UK branches of EEA banks where the home country's deposit guarantee scheme applies.

"Banks, building societies and credit unions will have to display these compensation stickers or posters in the branch window along with a sticker at the cashier's window or desk and a further poster in a prominent position inside."

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