Find out if your savings are protected
Now is the time to start thinking about moving any savings of more than £75,000 in one institution into a new account, as the protection enjoyed by savers in the UK will be cut back by £10,000 from 1 January 2016.
Currently, an individual saver's money is protected by the Financial Service Compensation Scheme (FSCS) to the tune of £85,000 should the bank or building society they have their deposit with go bust. But, under the new rules, savers' money will be protected up to a limit of just £75,000, and £150,000 for joint accounts.
It's therefore important to check that any savings accounts you have don’t exceed the £75,000 limit - especially as some providers have several brands under one umbrella group.
For example, if you have a sizeable sum deposited with Bank of Scotland, you should be careful about also depositing cash with Halifax, Saga, and Birmingham, Midshires - all are covered under the same banking license.
The Financial Services Compensation Scheme is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading, the FSCS may be able to pay compensation to its customers. Limits apply to how much compensation the FSCS is able to pay, and those limits vary between different types of financial products. However, to qualify for compensation, the firm you were dealing with must be authorised by the Financial Services Authority (FSA).
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.