UK savers may have to move their money around in the New Year so that they are guaranteed a fully protected deposit in the event of their bank defaulting.
The new rules, which will come into force on 1 January 2016, decrease the Financial Services Compensation Scheme (FSCS) compensation to £75,000 per person (1).
Previously, savings of up to £85,000 per person were protected, and up to £170,000 for joint accounts, which has now been decreased to £150,000 (1).
A European Union directive fixes the level of protection across the EU at €100,000, or its equivalent. The level that was agreed in 2010 translated to £85,000, but as a result of the euro falling against sterling, the rate is being adjusted according to current exchange rates. (2)
Although 95% of savers will still be protected, as many as 2.5m will not be, according to the FSCS, which strongly advises individuals to move their money if necessary (1).
Consumers were warned about the change back in July, according to the Telegraph, so this should not come as a surprise (2).
- The BBC. “Savers warned about 1 January compensations changes”. bbc.co.uk
- The Telegraph. “FSCS cash compensation limit cut to £75,000”. telegraph.co.uk