Customers holding bank accounts in the UK will see an increase in protection for their deposits in the event of a bank or building society failure. The current limit for the deposit protection scheme will rise from £85,000 to £120,000 starting in December. This change, announced by the Prudential Regulation Authority (PRA), represents the most significant increase since the limit was established in 2017.
The revised limit exceeds the PRA’s earlier proposal of £110,000 and accounts for recent inflation data and input gathered from consultations, as stated by the Bank of England. Under the Financial Services Compensation Scheme (FSCS), customers are protected up to this limit per person, per authorized firm. Customers do not need to take action for this new limit to apply automatically.
The increase is intended to bolster public confidence in the safety of funds in financial institutions. Sam Woods, deputy governor for prudential regulation at the Bank of England, noted that this change helps safeguard depositors in case of failures at banks, building societies, or credit unions.
Alongside the increase in the standard deposit protection limit, the cap for temporary high balances, which can arise from events such as a house sale or insurance payout, will also see an increase from £1 million to £1.4 million for a period of six months.
The FSCS is funded through levies on financial firms regulated by either the PRA or the Financial Conduct Authority (FCA). Various consumer and industry representatives have commented positively on these changes, stating that they reflect necessary updates to ensure strong consumer protection without hindering economic growth.
Source: https://www.bbc.com/news/articles/c867z63l06vo?at_medium=RSS&at_campaign=rss