The Bank of England has announced that consultation over the FSCS compensation limit will take place with a view to returning to its previous limit of £85,000. The compensation limit is set across the European Union at €100,000 and was changed to £75,000 in January 2016 reflecting the prevailing exchange rate at the time. Re-calculations would ordinarily take place every 5 years but since the Brexit vote sterling has fallen 10% against the euro, prompting the Bank of England to consider the directive that allows a “reassessment where there are unforeseen events such as currency fluctuations.” The Prudential Regulation Authority (PRA), which is part of the Bank of England, will consult on the plan until 16th December, however approval has already been given by the Treasury and the European Commission. Once agreed the change is expected to be introduced on 30th January 2017.
by Insignis in Newsletter Archive
So, what is the FSCS scheme and why was it put in place?Deposit guarantee schemes exist to protect depositors against authorised firms that are unable to pay or become insolvent. The European Commission requires all countries to provide a last resort protection to consumers in the event of a bank failure. Rules exist in the form of an EU directive for offering a limited level of protection, faster pay-out and improved internal financing of the schemes by each bank. This provides protection on both an individual front and a wider economic level.
Do you have more questions about the FSCS deposit guarantee and how it affects savers?Insignis Cash Solutions specialises in active management of client deposits including helping clients gain incremental FSCS protection by opening multiple accounts across various financial institutions with a simple one-signature solution.
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