You are here: Home - Investing - Experienced Investor - News -

Consumers underestimate FSCS protection

Written by:
Consumers vastly underestimate the amount of protection they have on their savings, according to new research by the Financial Services Compensation Scheme (FSCS)

The FSCS protects consumers when financial firms fail. It covers most major banks, brokers and insurance providers, but consumers need to check that they are with a regulated firm covered by the scheme. The recent failure of London, Capital & Finance, for example, was not covered by the scheme.

The research showed understanding of the FSCS limits is poor: Over two-thirds (68%) of consumers think FSCS protection for pensions is limited to just £5,000 and only 4% of consumers (less than one in 20) were able to identify the correct level of protection, currently £85,000.

Only a quarter (26%) of consumers believe that FSCS protection covers pension products. Previous research has shown that around one-third of people would invest more if they knew their pension was protected.

The FSCS said it is now working with the financial services industry to promote better information and establish a set of best practice standards for pensions protection disclosure to ensure that consumers are armed with the right information to make an informed decision about their retirement.

Mark Neale, chief executive of FSCS, said: “This research confirms the currently low levels of consumer awareness of pension protections. Consumers can be confident that if they have a pension or an annuity, it is fully covered by FSCS should anything happen to their provider. Such protection is not the case for all financial products available to take you through retirement, so consumers should ensure that they are aware of the different protection limits.

“We are working with leading firms in the life and pensions sector to ensure that the industry agrees a consistent approach to disclosing pension protection information. This working group, launched 18 months ago, will shortly publish guidelines on how life and pension product providers inform consumers about FSCS.”


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

ISAs: your back-to-basics guide for 2018/19

Here’s everything you need to know to make the most of your unused ISA allowance ahead of the 5 April deadli...

A guide to Sharia savings accounts

A number of Sharia savings products have upped their game in recent months, beating more familiar competitors ...

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
Ofgem introduces tougher entry tests for new energy suppliers

After a raft of failures, Ofgem will apply more stringent tests from June for companies applying for a licence to...