Deposit Protection Scheme Limit Reduced but New Categories of Deposit now Covered

Posted on 3 July 2015 by Ray Boulger

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The Bank of England has announced today that as a result of sterling improving against the euro over the last 5 years the limit for the depositor protection scheme (FSCS) will be reduced from £85,000 to £75,000 from 1st January 2016 for most accounts. This should allow plenty of time for those with between £75,000 and £85,000 on deposit with an institution to switch part of it should they wish.

The reason for this change is that every 5 years the European Deposit Guarantee Schemes Directive requires non euro member states to re-set at the equivalent of 100,000 Euros and so the limit will stay at this level for 5 years, at which time it could either increase or decrease, or stay the same.

Some depositors protected by the FSCS will be contractually tied into products with balances above £75,000. Subject to the results of a consultation which closes on 24 July the Prudential Regulation Authority intends to allow depositors to withdraw funds between the old and new limits without penalty from 1 August 2015 until 31

There are also two important pluses where the Directive has extended deposit protection:

  • The new £75,000 limit will from today also apply to some categories of depositors who were not previously covered by the compensation scheme, in particular large corporates.
  • From today depositors with temporary high balances will be covered up to £1m for 6 months from the date on which the money is transferred into their account, or the date on which the depositor becomes entitled to the amount, whichever is later.


The views expressed here are those of the author and do not necessarily represent or reflect the views of John Charcol Ltd

Categories: Bank of England, Personal finance, Regulation, Miscellaneous


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