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Exciting News for UK Bank Customers: Your Deposit Protection is About to Get a Boost!
Great news is on the horizon! Customers of UK banks and building societies will soon enjoy a significant increase in their deposit protection limits. Regulators have confirmed that the Financial Services Compensation Scheme (FSCS) will be raising the deposit limit from £85,000 to a whopping £120,000!
This fantastic update, announced by the Prudential Regulation Authority (PRA), is the largest increase since 2017 and is based on the latest inflation data and feedback from the industry. The new limit will kick in this December, and guess what? You won’t have to lift a finger—your accounts will be covered automatically!
Martyn Beauchamp, the head honcho at the FSCS, expressed that this increase provides consumers with stronger reassurance during these uncertain economic times.
“This rise ensures consumers can feel confident that their money is safe, from the very first penny up to £120,000,” he stated.
The FSCS protects deposits for each individual per authorized firm. So, if you have multiple accounts with the same banking license, they will share that £120,000 limit. Just a little tip: some major banks operate under several brands with one license, so it’s wise to check your bank’s details!
Sam Woods, the deputy governor for prudential regulation at the Bank of England and CEO of the PRA, added that this reform not only strengthens financial stability but also boosts public confidence.
“With this change, we aim to maintain the public’s confidence in the safety of their money,” he noted. “Depositors will be protected up to £120,000 if their bank, building society, or credit union encounters difficulties.”
Consumer groups have welcomed this decision with open arms. Which? hailed it as a “sensible move” that builds trust in the financial services sector without putting a damper on economic progress. Rocio Concha, the group’s director of policy and advocacy, emphasized that strong consumer protections can coexist with economic goals.
People in the industry are also on board with this decision. Eric Leenders, managing director of personal finance at UK Finance, remarked that adjusting the limit for inflation was the “right” move, and the sector will collaborate with regulators to ensure a smooth transition.
On top of this update, the PRA has also confirmed an increase in the temporary high balance cap. This safety net, which protects larger sums resulting from significant life events like selling a house, receiving an inheritance, or getting an insurance payout, will rise from £1 million to £1.4 million. This coverage lasts for six months from the time the cash hits your account.
And here’s a good piece of news: the FSCS is funded by a levy on the PRA- and FCA-regulated firms, not taxpayers!
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