Savings compensation limit 'to rise to £85,000'

Monday, 20 December 2010 12:00

The top compensation limit on deposits will increase from £50,000 to £85,000 per person from December 31st, the Financial Services Authority (FSA) has confirmed.

Sheila Nicoll, the regulator's director of conduct policy, said the increase is part of a "radical overhaul" of the system for reimbursing savers when a financial institution fails.

The rise is part of a wider move to increase the compensation limit on savings to the equivalent of ?100,000 across the European Economic Area by the end of the year.

In addition to raising the upper limit on payouts, the FSA will also introduce rules requiring the majority of claims to be settled within seven days. The remainder will have to be completed within 20.

Furthermore, compensation on deposits will be ring-fenced, so no deductions will be made if consumers have an outstanding loan or debt with the same provider.

"The UK's Financial Services Compensation Scheme will begin a publicity campaign in the new year to inform customers of the compensation limits and of the importance of ensuring that they are covered and by which national scheme," Ms Nicoll commented.

A recent poll by moneysupermarket.com found that 60 per cent of Britons were unaware of the impending changes to compensation payouts.

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