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New savings protection set to come into force

New savings protection set to come into force

Category: Savings

Updated: 04/04/2011
First Published: 29/12/2010

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 It is now over 6 months old so the content may be out of date.

Savings accounts are set to benefit from significantly improved protection, but fewer than one in five people know about the change.

As of 31 December 2010, compensation limits for savers who lose money when a bank or building society goes under will increase from £50,000 to £85,000.

However, only 17% of people are aware of new rules which will provide even better savings protection, new research by the Financial Services Compensation Scheme (FSCS) shows.

The new rules will also mean that individuals and small businesses will receive compensation in a far speedier fashion.

The FSCS will aim to pay compensation in the vast majority of cases within seven days of a deposit taker failing. Remaining claims, which are likely to be more complex, are to be paid within 20 working days.

Each account holder is also treated as an individual case which effectively doubles the limit payable to £170,000 for an account jointly held between two people.

"The new rules will better protect savers if their bank, building society or credit union goes bust," said Mark Neale, chief executive of the FSCS.

"The £35,000 increase provides a big boost in FSCS protection for UK consumers and should protect the vast majority of savers.

"It's important for consumers to be aware of these changes and the FSCS will be working alongside all deposit-taking institutions, to ensure that consumers know about the new limit and faster payout times.

"The rise to £85,000 is good for consumers and consumer confidence."

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