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Savers to benefit from greater protection

Savers to benefit from greater protection

Category: Savings

Updated: 04/04/2011
First Published: 23/09/2010

MONEYFACTS ARCHIVE
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Savers are set to benefit from a greater level of protection for their funds.

From the beginning of next year, deposits in the UK's banks and building societies will be insured to the tune of 100,000 euros, which is approximately £84,000 currently.

The change is a result of European legislation that is designed to introduce a universal amount of cover across the continent.

The current compensation limit, as covered by the Financial Services Compensation Scheme, has been £50,000 for the last couple of years.

Customers with joint accounts are insured for £100,000 per institution.

Before that, savers were covered for all of their first £2,000 of deposits, and 90% of their next £33,000.

This was changed to 100% of £35,000 as a reaction to the banking crisis, when Northern Rock customers famously queued round the block to pull their money out of the failing bank.

The FSA plans to launch a consultation shortly, with an amount in sterling likely to be set, although this may well be adjusted if there are marked changes in the exchange rate.

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