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New deposit guarantee limit

Financial Services Compensation Scheme - what it is, what it covers and how to claim

• FSCS Opens new window

The new £85,000 deposit compensation limit is the British equivalent of the €100,000 limit which has come into force in all European Economic Area (EEA) member states.

In the UK, savers' money is covered by the Financial Services Compensation Scheme (FSCS). This covers deposits with UK deposit takers and 'subsidiaries' of foreign banks which operate in the UK.

However, deposits in 'branches' of EEA banks operating in the UK will not be covered by the FSCS, but rather by the scheme of the country where the branch has its headquarters.

Other changes to the FSCS that came into effect on 31 December include:

• fast payout rules, with a target of a seven day payout for most claims, and the rest within 20 days
  
• protecting customers by paying compensation on a gross basis without deducting loan balances - at the moment, any outstanding loan or debt would be deducted from any compensation
  
• combining compensation cover for customers with deposits in two merging building societies

Mark Neale, chief executive of the Financial Services Compensation Scheme, said: "The new limit is good news for consumers and will provide greatly enhanced FSCS protection for people. It comes into force at the same time the Scheme is implementing changes that will see us paying out the vast majority of depositors within seven days. 2011 will bring greater FSCS protection."

For further information on the FSCS, including what types of companies and savings are covered, and how to make a claim, follow the link below.

• The Financial Services Compensation Scheme Opens new window

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