The Financial Services Compensation Scheme (FSCS) – the safety net for savers – has raised its compensation limit from £75,000 to £85,000 for individual accounts and £150,000 to £170,000 on joint accounts.
The FSCS was set up under the Financial Services and Markets Act 2000 and became active on 1 December 2001. It provides compensation to customers of financial firms who have stopped trading or who do not have the assets to pay claims made against them.
The scheme’s limit of compensation throughout the EU is 100,000 Euro. This is then translated into Sterling for UK consumers. For the past 12 months, due to the strength of the pound against the Euro, the UK limit has been £75,000. Following Britain’s decision to leave the EU, the value of the pound dropped dramatically. The Bank of England made the decision in November to increase the limit to £85,000 to better reflect the Pound for Euro exchange.
The increase in the limit is valid from today, 30 January 2017 and is expected to remain at £85,000 for the next five years.
People buying and/or selling property may have amounts larger than £85,000 in their bank accounts for a short period of time. In these cases, the FSCS provides a temporary £1 million protection limit.