Banks to display deposit protection signs
The Financial Services Authority (FSA) is introducing new rules which will require banks and building societies to display clear signs at branches and on their websites, telling customers their savings are protected.
The sign will tell savers: “Your deposits are protected up to £85,000 by the Financial Services Compensation Scheme, the UK deposit protection scheme. Any deposits you hold above this amount are not covered.”
The Financial Services Compensation Scheme (FSCS) is an independent scheme established on 1 December 20011 as a compensation fund of last resort for customers of authorised financial services firms in the UK.
It will compensate customers if a bank, building society or financial firm stops trading or has been declared in default and is unable to pay claims against it.
The new rules are designed to improve consumer confidence in the safety of their savings and to raise the profile of the scheme.
Despite a £4m publicity campaign last year, many customers remain unaware of the protection available.
Hector Sants, chief executive of the FSA, said: “The posters and website notices we are going to be mandating will help to prompt consumers to get more information and to make informed decisions about how much money to deposit with one bank.”
Banks which operate in the UK but which are headquartered abroad will have to display signs stating that deposits are not covered by the FSCS and offering information on which other national scheme is providing the protection.
The FSCS has paid out £26 billion in compensation, it was revealed today, representing an average payment of £1,448 for each family in the UK.
The FSCS advises that savers should check their savings are with Financial Services Authority-authorised institution, or they may not be eligible for FSCS protection.