Concerned UK savers can breathe a sigh of relief with the news that the New Year will bring new rules, with the first £85,000 in any bank or building society receiving automatic protection from the state.
Under the current rules, £50,000 is covered, but after the well documented collapse of Northern Rock, savers have been looking for more protection. This Is Money reports that the new Financial Services Compensation Scheme will push the limit up to £85,000 and that payments should be made within 20 working days, although the FSCS says it is aiming to achieve any necessary compensation payments within the target of 7 working days.
Many savers who used doomed bank Icesave were waiting up to 2 months, so this will come as very welcome news.
However, Kevin Mountford at Moneysupermarket.com has urged caution for savers with more than one pot: “Until 1 January, consumers with over £50,000 in the bank should ensure their money is spread between accounts, taking care to avoid using two products from the same provider – as only £50,000, or £100,000 for joint accounts, is protected within each institution.”
“It’s important savers check which banking group their accounts sit with, as two seemingly distinct providers might fall under the same banking umbrella. For example, First Direct is owned by HSBC, meaning any customer who has money saved with both providers will only be protected up to £50,000.”
The new safety net kicks in on January 1st, 2011.
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