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Savers in dark over FSCS compensation limit cut

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
23/12/2015

Three quarters of Brits are unaware that the protection provided for savings by the Financial Services Compensation Scheme (FSCS) will fall by £10,000 to £75,000 on 1 January 2016.

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 is falling following the decline in the value of the euro relative to the pound.

Research by peer-to-peer lender RateSetter shows 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 – a slight decrease from the 30 per cent who were able to correctly identify it four months ago.  Three in ten (29 per cent) believe that the rules around the FSCS are confusing.

One in eight people (13 per cent) mistakenly believe that the FSCS protects their money against the pressures of inflation and one in ten (9 per cent) thought the FSCS currently provides protection for more than £85,000.

“In just a few days, the FSCS limit will be fall to £75,000, the first reduction in its history,” said Rhydian Lewis, CEO at RateSetter.

“Anyone fortunate enough to have more than that amount with any one provider will need to ensure that their money is properly allocated.

“Savers can increase their protection by splitting their money between different banks and building societies.  However, some investors with more than £75,000 in savings have told us that the reduction could prompt them to look elsewhere for a better rate – we’ve certainly seen increasing levels of investment on our platform since the change was announced.”

The FSCS limit reduction was announced in July 2015.

FSCS deposit protection reduced

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