How Safe are your Savings

The FSCS has a maximum level of compensation for a deposit claim of £75,000 per person per banking license.  However, this is due to increase to £85,000 from January 2017.  It’s vital to remember that this limit is per institution, not per account.  So, for example, if you have £40,000 in a notice account and £65,000 in a fixed rate bond with the one bank, and that bank went bust, you would lose £30,000 which is the amount of your savings above the FSCS limit.

There are a few occasions when you might receive protection in excess of the FSCS limit.  Known as ‘Temporary High Balance’ protection, if you’ve had a life event such as a divorce settlement, inheritance, or pay out from a life insurance policy, deposits over £75,000 and up to £1m per banking license are protected up to six months.  This protection is designed to give savers breathing space to decide what they plan to do with their lump sum.  After the six month period finishes, however, you will need to make sure you have no more than £75,000 with any bank, or £85,000 from January. 

John BaxterComment