The Financial Services Compensation Scheme (FSCS) compensation limit for savers has now reduced to £75,000 (or £150,000 for joint accounts) per institution. Previously anyone who had up to £85,000 in a bank or building society would be covered if an institution went bust. The new limits came into place on 1st January 2016.
The FSCS is a non-profit, independent organisation set up under the Financial Services and Markets Act 2000. It has paid out in excess of £26 billion* to more than 4.5 million consumers since it was set up in 2001.
The change has taken place under the European Union Deposit Guarantee Schemes Directive, which fixes a harmonised limit of €100,000 (or the equivalent) across Europe. The reduction from the outgoing £85,000 limit is due to the strong sterling exchange rate against the Euro.
Nearly all banks and building societies in the UK are covered by the scheme; if they are registered with the FSCS it will be stated on their website. If multiple institutions are part of the same banking group they will share a licence and one £75,000 protection limit will apply for the entire group. For example Bank of Scotland shares a licence with AA, Aviva, Birmingham Midshires, Halifax, Intelligent Finance, SAGA, and St James's Place.
New temporary high balance limits were introduced on 3rd July 2015 to cover sums such as real estate transactions, benefits payable under insurance policies and other short-term high balances. For most categories the limit will be up to £1 million per depositor per life event, although the FSCS will provide unlimited cover for personal injury claims.