FSCS gives savers pandemic lifeline
SAVERS are to be offered beefed-up protection for their deposits amid concern that the pandemic has made bank failures more likely.
Customers with a large balance will be entitled to a refund for longer than the usual limit if their bank collapses, under the new rules from the Financial Services Compensation Scheme lifeboat fund. Bosses at the FSCS said the extra support was intended to give customers reassurance they would not lose out even if finance companies were brought down by the economic turmoil unleashed by Covid-19.
Deposits with UK banks, building societies and credit unions are protected up to £85,000 per person under FSCS rules, meaning customers get a payout if their deposit holder fails. There is additional protection for customers who have temporarily high balances of up to £1m – for example, to protect those holding the proceeds of a house sale, a large redundancy payment, a divorce settlement or an insurance payout.
Normally this cash is protected if it has been in a customer’s account for up to six months, but the FSCS has extended this coverage to 12 months, it said yesterday.