Savers now have £85,000 of their savings guaranteed in the event of a bank failure, thanks to a fall in the value of the pound.
European rules mean that savings worth €100,000 held at each financial institution must be protected by a national body. In the UK, the Financial Services Compensation Scheme (FSCS) protects the amount savers hold in UK financial institutions.
This FSCS previously guaranteed £75,000 of savings but the decline in the value of the pound against the euro means British savers now have an extra £10,000 protected, in order to stay in line with the European limit.
Savers will get the increased protection from today, Monday 30 January.
Only the first £85,000 will be guaranteed at each financial institution so savers with more than this are advised to split their cash across two or more providers.
Joint accounts will have a new limit of £170,000, up from £150,000.
Mark Neale, chief executive of the FSCS, says: “The £85,000 limit protects about 98% of the UK public. More people will have more protection for more of their money.”
This change is good news for savers but it’s important to remember that if banks share a licence you will still only receive £85,000 protection, even if your savings are split across two distinct brands.
For example, HSBC and First Direct share a banking licence, as do Clydesdale Bank and Yorkshire Bank. If you held £50,000 in HSBC and £50,000 in First Direct, you would only be guaranteed £85,000 in the event of a bank collapse.
Make sure you have no more than £85,000 at each financial institution to ensure you’re fully covered.