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Savers could get extra protection

Savers could get extra protection

Category: Savings

Updated: 01/04/2009
First Published: 01/04/2009

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The Financial Services Authority (FSA) has revealed it is to consult on whether the Financial Services Compensation Scheme (FSCS) should provide extra protection for holders of temporary high deposit balances in the event of the failure of a UK bank.

The current maximum deposit protected by the FSCS is £50,000 per individual per bank or building society.

However, the regulator said that customers occasionally have balances in excess of this at a single institution as a result of perhaps selling a house, receiving an inheritance or pension lump sum, or an award for personal injury.

"Our proposals will protect people who have little or no choice about holding a high balance for a limited period over the current FSCS limit before they can diversify it, if they wish, between different institutions," said Thomas Huertas, director of the banking sector at the FSA.

He added that as the intention is not to protect consumers that keep a high balance for a long period, the extra protection afforded will be time limited.

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