From next week, savers will receive a boost to the level of protection they get if their bank or building society goes bust.
Currently, the Financial Services Compensation Scheme (FSCS) protects up to £75,000 of savings per person, per institution.
However, this will rise to £85,000 from 30th January.
The limit is changing because of the falling pound, with the value of protection pegged broadly to 100,000 Euros.
The new level of protection means that savers can deposit an additional £10,000 with each institution and be guaranteed to receive their capital back if it fails. However, some institutions have different brands and trading styles, which can mean savers unwittingly place more than the maximum with an institution, leaving some of their savings unprotected.
The Which? website has a handy tool, showing which banks and building societies are part of the same institution.
Click here to use the tool now.
Spreading your savings around different accounts, to ensure they are fully protected, may feel like a hassle. But it’s vital if they are to be fully protected in the event of a bank or building society going bust.
The small, £10,000 increase, will be particularly welcomed by those people who hold deposit accounts in their SIPPs (Self-Invested Personal Pensions).
As our best buy table for SIPP deposit account shows, the options open for SIPP savers are extremely limited, with only a handful of banks and building societies accepting applications from SIPPs. This has led to some SIPP savers placing more than the maximum covered with a single institution; leading to a potential loss of capital, should that bank or building society go bust.
The new limit won’t completely solve that problem. But, as a certain supermarket famously said: “Every little helps!”
We are here to help
If you would like more information about how the FSCS works, or how it is applied to SIPPs, please get in touch.
You can call Bev or Sarah on 0115 933 8433, we will be happy to help.