We recently reported on the impending changes to the protection that the Financial Services Compensation Scheme (FSCS) offers to individuals who have cash savings in bank or building society accounts which are covered by the scheme.
This time, we’re going to focus on how these changes affect you; the individuals who have savings which may be affected.
As leading financial advisors in Lancaster, we feel it’s our duty to inform and educate our clients of any changes which may affect their savings.
How Does the FSCS Work?
The FSCS is in place to protect the eligible savings within bank accounts and building societies of up to the current deposit protection limit of £85,000.
This protection acts as a back up to ensure that your money is safe and secure should your bank, building society or credit union fail.
When Will My Savings Be Protected?
As it stands today, the current deposit protection limit of £85,000 is still in place. This won’t change until the 1st of January 2016, when the new limit of £75,000 will come into force.
This means that you won’t see any immediate change to the protection of your existing savings in your accounts which are covered by the FSCS.
However, if you are a large company or a small local authority, such as a local parish council, your protection has already begun.
Any eligible savings which are in bank or building society accounts have been protected since the changes were announced on the 3rd of July 2015. The £75,000 deposit protection limit applies to these savings, too.
What If I Have a Temporary High Balance?
If you have recently come into a lump sum of money which was the result of an event such as a house sale or insurance payment, you can still be protected by these changes to the FSCS.
These payments can be protected for up to six months from the following:
- The moment the money has been credited to your account.
- The moment that the money becomes legally transferable.
Again, any savings of this kind have been protected since the 3rd of July 2015.
Why The New Limit?
The FSCS have found that the new limit will protect more than 95% of all savers who have savings protected by the scheme.
It’s worth noting that the overwhelming majority of people have savings of less than £50,000, meaning that only a small majority of people will notice any significant change in the protection of their money.
We hope that explaining how these changes will affect you has put your mind at ease. If you are still worried that your money may not be protected, don’t hesitate to contact our expert financial advisors here at Burton and Fisher.
We offer independent, friendly financial advice to all our clients, so call us today on 01524 416872 and one of our dedicated team members will be happy to help.