The limit was changed on 3 July 2015; however the government agreed to defer the change until the New Year to allow customers who have savings exceeding the new limit to adjust their savings portfolio should they wish to do so.
The new limit will be £75,000, which will protect more than 95% of all savers. The change comes under the European Union Deposit Guarantee Schemes Directive and fixes a harmonised limit of €100,000 (or the equivalent local currency) across Europe.
The current £85,000 level of protection continues until 31 December 2015 (this is £170,000 for joint accounts) reducing to £75,000 (£150,000 for joint accounts) from 1 January 2016.
If you have money in accounts exceeding £75,000 with one financial institution, you will be able to withdraw up to a maximum of £10,000 without loss of interest and regardless of the specific terms and conditions of the account. Customers in this position should already have been contacted by their bank/building society to inform them of this change.
Savers have until 31 December 2015 to submit their withdrawal requests and The Prudential Regulation Authority (PRA) has allowed financial institutions up to 60 days to process customer withdrawals from the date of receipt.
Although this change will affect a small number of savers (those with over £75,000 in savings with one provider) it is still advisable to review your accounts, understand what the changes mean and to consider alternative providers if you are planning on moving funds around.
Other points to note:
- The deposit protection limit is for the total balance and will also include any interest that has not yet been added to the account balance or paid to the nominated account. For example, if you have a savings balance with Aldermore of £79,500 and interest of £500, a total of £80,000, you will be allowed to withdraw £5,000.
- An exception is made for temporary high balances of up to £1m. Deposits that qualify as temporary high balances include proceeds from a house sale, equity release, divorce settlement or redundancy package. The FSCS will protect these funds for up to six months from the time the money is accessible in the account, after which the increased protection will drop back down to £75,000.
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