Financial Services > e-banking > Banking news
New UK bank deposit guarantee limit increased to GBP85,000

Mon, 20 Dec 2010

The Financial Services Authority (FSA) has confirmed the new deposit compensation limit will rise from £50,000 to £85,000 for each person in each authorised firm.

The change comes into effect from December 31 and is the equivalent of the €100,000 deposit compensation limit which comes into force in all European Economic Area member states at the same time. Another change that will come into effect at the same time are rules surrounding fast payouts. Most savers in failed banks would receive their payouts after seven days, with the remainder being compensated within 20 days.

In addition, the FSA is looking to protect customers by ring fencing their deposits if they have savings as loans with one firm. Presently, any outstanding loan or debt would be deducted from any compensation. This new pan European requirement supersedes the existing UK arrangement which has been in place since 2009 and which enabled separate compensation cover for customers with deposits in two merging building societies .

Sheila Nicoll, FSA director of conduct policy, said: "The need to maintain customer confidence in the banking system is one of the key lessons from the financial crisis. Today’s announcement completes a radical overhaul of depositor compensation."
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