FSA confirms increase in compensation limit for savers to rise from 31st December 2010.
A rise in the compensation limit could benefit savers in 2011 according to the FSA.
The Financial Services Authority (FSA) has confirmed that the compensation limit for savers will rise on 31st December 2010 from the current limit of £50,000 to £85,000.
The new limit applies per authorised firm. The figure of £85,000 is broadly the sterling equivalent to the new 100,000 euro limit which will come into force across the European Economic Area (EEA) from the end of the year.
The news will be welcomed by consumers who previously had to carefully separate their savings to ensure full protection; this often resulted in less competitive interest rates. However the change will go some way to helping with this issue.
Sheila Nicoll, director of conduct policy at the FSA 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. In future, all the still-separate national compensation schemes across the entire European Economic Area will offer cover at €100,000 or the local currency equivalent – a limit which will protect the vast majority of depositors.
“Alongside increasing the amount of depositor compensation, raising awareness of the compensation scheme is vital. The UK’s Financial Services Compensation Scheme will begin a publicity campaign in the New Year to inform customers of the compensation limits and of the importance of ensuring that they are covered, and by which national scheme.”