Finally, some good news for those of us with cash savings!
The Financial Services Compensation Scheme announced back in November that it would increase the limit of protection it would afford to savers in the event that a bank goes bust. Today it announced that this increase would come into force with immediate effect. The limit has risen from £75,000 to £85,000, with the limit for joint accounts increasing to £170,000.
Why does the limit keep changing?
You may recall that the limit had previously been set at £85,000, and reduced to £75,000 on 1 January 2016. The reason for the changes is down to the fluctuations in the strength of the pound against the euro. A European directive sets the deposit protection limit at €100,000. A strong pound resulted in the reduction in the limit. Recent events have weakened the pound, which has led to the increase once more.
What does it mean for me?
The FSCS protection for up to £85,000 applies to money deposited in banks, building societies and credit unions. They include cash saved in current accounts, savings accounts and cash ISAs.
Banks, building societies and credit unions have until 30 June to incorporate the changes into their computer systems, so there may be some confusion between now and then and inconsistent messages sent out to savers as to exactly how much protection they have.
You can check whether your money is safe using FSCS’ handy tool.