Banks to publicise protection schemes for savers
Banks, building societies and credit unions will have to display information in branches, clearly telling customers how much of their savings are covered by a compensation scheme.
Savings in UK banks and some foreign banks are covered by the Financial Services Compensation Scheme (FSCS).
The scheme covers savings up to the value of £85,000.
It compensates customers of financial institutions which are unable to pay claims against them, usually because they have ceased trading or have been declared in default.
However, savings in some banks from the European Economic Area are not covered by the FSCS, even though they have UK branches.
Savings in these banks may be covered by the deposit guarantee scheme operated in the bank’s home country instead.
These national schemes may only protect savings up to the value of 100,000 euros, which equates to £80,170 at current exchange rates, significantly less than the £85,000 covered by the FSCS.
So that all customers have the correct information to ensure their savings are fully protected, financial institutions will have to display posters and stickers about which compensation scheme applies to them from 31 August.
The information will also be displayed on banks’ and building societies’ websites.
Customers with savings which exceed the cut-off limit for their bank’s compensation scheme are advised to spread their savings between different banks to ensure they gain the maximum protection.
Banks which are protected by their own country’s scheme, rather than the FSCS, include Anglo-Irish Bank, Triodos, ING Direct and Bank of Cyprus.
Spain-based Santander is covered by the FSCS as it has a separate UK subsidiary.
However some of its customers were recently concerned after ratings agency Moody’s downgraded the credit rating of its Spanish parent company.
Santander quickly reassured its UK savers that their money is protected by the FSCS scheme.