Deposit protection limit for savings to be bumped back up to £85,000 tomorrow
Savers will have an extra £10,000 safeguarded as of tomorrow, as the deposit protection limit is increased back up to £85,000.
The deposit protection limit under the Financial Services Compensation Scheme (FSCS), which is designed to protect consumers' cash should lenders run into hot water, was cut to £75,000 last year in an effort to put the UK in line with the European directive governing the scheme, which states the limit must be equivalent to €100,000.
Since that decrease, the pound has fallen sharply, prompting the Bank of England to run a consultation into the limit last November and later decide to reinstate the £85,000 cut off.
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The Bank revealed most of the 24 responses it received to the consultation supported resetting the limit, with a couple arguing the limit should be increased above £85,000.
The new £85,000 limit will apply from tomorrow for deposits held at banks, building societies and credit unions, while joint accounts will be protected up to £170,000. The FSCS has said the new rate will protect around 98 per cent of people across the UK.
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"It's good to see that more of savers' cash will be protected and that there is a safety net in place should the worst happen," said Gareth Shaw, head of Which? Money Online. "However, our research found that many aren't aware of the protections in place.
"Financial providers, the regulator and the FSCS itself should be doing more to help people understand how their money is protected."