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Bank Protection Limit Cut

With effect from 1 January the savings limit which is protected in the event of a bank, building society or credit union collapse has been reduced to £75,000 per institution (or £150,000 for joint accounts). The new limit represents a £10,000 reduction on the previous limit which had been in place for five years.

Savings compensation limits are recalculated centrally in Europe in accordance with the European deposit guarantee schemes directive every five years, with the new UK rate being based on the sterling equivalent of €100,000. The comparative strength of sterling against the euro has resulted in the lower protection limit seen in the UK.

According to calculations made by the financial services compensation scheme (FSCS), 97% of people will still be protected by the lower limit. However, it is worth noting that the limit relates to each individual banking group, covered by a financial conduct authority licence, rather than to each individual bank or building society. So, for example, deposits of £75,000 in NatWest and Barclays would be fully protected as they are completely separate banks. However, deposits of £75,000 in First Direct and HSBC would only be protected up to £75,000 as both these entities operate under a single banking licence.

If you’re looking to create an investment portfolio to meet your current and future requirements, or if your situation has changed and you may therefore need to review your existing portfolio, contact Beckworth by using one of the links on our website.