You are here: Home - Saving-Banking - News -

£1m deposits from home sale, divorce or death to be protected for a year

0
Written by:
12/08/2020
Up to £1m deposited with lenders after ‘major life events’ will be protected for a year rather than the usual six months, due to the impact of Covid-19.

Under the Financial Services Compensation Scheme (FSCS), cash in UK-regulated banks, building societies and credit unions is covered up to a value of £85,000 per person, per financial institution, if the provider were to go bust.

But in 2015, the FSCS introduced a ‘temporary high balance’ protection for deposits up to £1m where savers can prove the money came from a ‘major life event’.

This means that in the six months after depositing cash from a home sale, divorce, redundancy, or compensation in respect of death, the money (up to £1m) would be protected under the scheme.

However, due to the impact of Covid-19 and in recognition that some people have reduced access to banking services, the Prudential Regulation Authority (PRA) has temporarily extended the FSCS coverage for these temporary high balances from six months to 12 months.

It applies to deposit-taker failures after 6 August 2020 with deposits protected until February 2021.

If a qualifying deposit was made in September 2020, the protection will run until September 2021, FSCS confirmed.

For a temporary high balance made from 1 February 2021, the protection will revert back to six months.

Caroline Rainbird, FSCS chief executive, said: “The coronavirus pandemic has been very worrying for everyone, and people are understandably concerned about the possibility of losing their temporary high balance should their deposit taker fail.

“The temporary extension of FSCS’s protection from six to 12 months will do much to reassure them should the worst happen during these uncertain times.”

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.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

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.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week