From the 31st of December the Financial Services Authority will raise the Financial Services Compensation Scheme from £50k to £85,000, bringing it in line with the European standard of €100,000.
This will give additional security to savers and hopefully give them the piece of mind they need (and deserve). At the height of the credit crunch many savers that were over the compensation limit were spreading their money across a number of financial institutions in a bid to secure their cash in the event any institution went under. The new limit will hopefully end the era of uncertainty for many savers and help keep their savings consolidated under one roof.
The FSA will also be introducing a number of new measures that gives individuals additional security with their finances. For instance, individuals who are unfortunate enough to bank with a bank that goes under can expect to be reimbursed within 7 days, but can be anywhere up to 20 days. This will take both the pressure and strain off individuals that are caught in this situation. Also, the scheme will now pay out the total amount of savings a customer has lost compared to the current system where any outstanding debts to the organisation get offset.
However, under the new system individuals will have to be smarter with where they put their money as merged organisations will count as one institution. So, for instance, RBS and NatWest are considered one institution as far as the Compensation is concerned. So overall, the new rules governing the scheme should be more beneficial to consumers and see that a greater proportion of their savings are covered should anything unfortunate happen.