Posted by admin - November 23, 2016 9:21 am Financial Services Compensation Scheme (FSCS) rate change

The maximum compensation payable to account holders and savers if their bank collapses is to return to its previous limit of £85,000.

Bank of England

The Bank of England has said the change to the Financial Services Compensation Scheme (FSCS) would happen by 30 January 2017. The compensation limit was lowered to £75,000 in July 2015, following sterling’s rise against the euro. The new maximum compensation of £85,000 was previously in place for five years up to July 2015.

Currency fluctuations

The amount of compensation payable is set at €100,000 across the European Union, and under normal circumstances is re-calculated in sterling every five years. However, since the Brexit vote, sterling has fallen more than 10% against the euro and the European directive involved allows a more frequent assessment where there are unforeseen events, such as currency fluctuations.

Prudential Regulation Authority (PRA)

The Prudential Regulation Authority (PRA) will now consult on the plan, although the idea has already been approved by the Treasury and the European Commission. The consultation will close on 16 December.  Banks and Building Societies will then have until the summer of 2017 to change the conditions on their publicity material.