Savings guarantee increased from £35k to £50k

It has been confirmed by the Financial Services Authority (FSA) that the compensation limit for bank deposits has been increased from £35,000 to £50,000 and will take effect on Tuesday, 7 October.

The new limit applies to each customer so joint accounts will be guaranteed up to £100,000.

According to Chancellor Alistair Darling, the new limit means that 98% of account holders would have all their savings protected and will go a long way to assuring people that their deposits are safe.

Meanwhile, the FSA is to consult on whether the compensation limit should be increased even further.

The news from the FSA follows that from the Government of Ireland who last week said it will guarantee the deposits and debts of the country’s banks for the next two years.

The Irish scheme covers Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society.

Following the announcement, UK banks were worried that savers would transfer their funds to Ireland.

Following the guarantee, it is understood that thee Government will soon be introducing legislation to further improve consumer confidence in the banking sector.

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