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New year, new reduced deposit protection

Savers now have a new level of Financial Services Compensation Scheme protection that is £10,000 lower.

Three out of four savers may be unaware that the protection provided for savings by the Financial Services Compensation Scheme (FSCS) fell by £10,000 to £75,000 on 1 January 2016. The previous £85,000 limit was in place for almost five years.

The FSCS, launched in 2001, guarantees the safety of savings kept in banks and building societies up to a limit of €100,000, to match the guarantee offered in the EU. The UK limit has fallen following the decline in the value of the euro relative to the pound.

Research by peer-to-peer lender RateSetter shows that the public awareness of the level of protection provided by the FSCS is declining and many people overestimate its ability to protect them. Only a quarter of people (27 per cent) correctly identified the current level of FSCS protection when it conducted research in August 2015.

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