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Savers covered up to £50,000

Created:
3 October 2008
Written by:
Rosie Carr

Savers in the UK are now guaranteed to get back £50,000 of their money on deposit, and savers with joint accounts will be eligible to claim up to £100,000. The increase from the old compensation limit of £35,000 takes effect from next Tuesday, 7 October.

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The announcement from the Financial Services Authority follows intense pressure on the UK government to boost savers' confidence, and further government legislation is planned to reassure British savers that their money is safe in British banks. The FSA hinted that it is considering whether the compensation limit should be higher still; the speed with which the compensation scheme can pay compensation; and the rules surrounding whether deposits are covered on a legal entity, a 'brand' or an 'account' basis.

At the moment savers who spread their cash around different banks could find that they only qualify for a single compensation payment, because banks with different brands often operate under a single licence. For instance, Halifax, Birmingham Midshires and Intelligent Finance are all covered by a single licence. See the table below for some examples (the list is not exhaustive):

Bank Other brands covered by same licence
Abbey Cahoot
Co-operative Smile.co.uk
HBOS Halifax, Bank of Scotland, B'ham Midshires, Saga, The AA, IF
HSBC firstdirect
Lloyds TSB Cheltenham & Gloucester

The higher limit stops some way short of measures taken in other countries. Ireland has guaranteed all deposits, while the rescue plan under consideration in the US will guarantee deposits up to $250,000.

MORE...

For more on the bank crisis, see www.investorschronicle.co.uk/bankingcrisis

Other useful websites include :

FSA: www.fsa.gov.uk

Financial services compensation scheme: www.fscs.co.uk

How safe is your money: http://howsafeisyourmoney.co.uk

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