FSA: Banks must clearly display deposit compensation details
The Financial Services Authority (FSA) has demanded that all banks, building societies and credit unions must display information explaining to customers which deposit guarantee scheme applies to their deposits.
The new rules, set to take effect from August 31, calls for prominently displayed posters and stickers in branches and on websites.
If customers are using the UK branch of a foreign bank from the European Economic Area (EEA), the posters will have to set out that those customers are not covered by the UK’s Financial Services Compensation Scheme (FSCS). In this case they would have to specify which national scheme will provide protection.
Andrew Bailey, FSA director of UK banks and building societies, said customers need to feel confident about their money.
“They need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure,” he said.
Eligible deposits are protected up to a total of £85,000 by the FSCS, but any deposits held above the £85,000 limit are not covered – and this includes total deposits held across multiple accounts belonging to one banking group.
For UK branches of EEA banks, the protection limit is €100,000.
But the FSCS said today that while the new guidelines were a step in the right direction, the financial services industry needed to go further.
“The banking crisis shows how important it is for consumers to have clear information about FSCS protection,” chief executive Mark Neale said.
“We never again want to witness the run on a bank because people do not know their money is protected.”
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