The level of deposit protection under the Financial Services Compensation Scheme (FSCS) will be reduced to £75,000 (£150,000 for joint accounts), down from the existing level of £85,000. This cut is the result of the strength of the Pound against the Euro as the ruling is actually €100,000 and the rates get recalculated every five years. But it’s not all bad news!
The Treasury have agreed a six month extension on the time to allow the public to get their affairs in order so this won’t come into effect until 1 January next year. Clients with savings above these levels should start planning now how they may move their funds to meet this lower limit and remain fully protected.
Plus, from 3 July 2015, the FSCS will provide a £1 million protection limit for temporary high balances held with a bank, building society or credit union if it fails. Things like the proceeds from a house sale, a large pension lump sum, or a redundancy payment could qualify for this new protection limit.
The Financial Services Compensation Scheme is funded by a levy on all financial advisers and institutions and backed further by the government. It has been a contentious subject recently as many advisers have seen their invoices triple due to some recent high profile failings. Always make sure you see a regulated financial adviser and they will be able to tell you if your investments are covered by this valuable protection or not.
Jeff Fawcett, Chief Investment Officer of Dorset based award winning Strategic Solutions Financial Services, commented: “The addition of the temporary high limit is great news for people who may have higher than usual balances in their bank, building society or credit union accounts in the short term, as it saves them having to panic and open several accounts to spread this risk around.”
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