Fewer than one in five aware of improved protection for savings accounts

Only 17% of people in the UK are aware of new rules which will provide even better savings protection, new research by the Financial Services Compensation Scheme shows.

As of today (Friday 31 December 2010), compensation limits for savers who lose money when a bank or building society goes under will increase from £50,000 to £85,000 to comply with the €100,000 requirement of the Deposit Guarantee Schemes Directive (DGSD). Consumers with deposits in FSA-authorised institutions will be protected by the Financial Services Compensation Scheme.

In addition, faster pay out rules are now in force which means many individuals and small businesses will receive compensation much quicker. The FSCS is moving towards a faster payout for deposits from January 2011.

The FSCS will aim to pay compensation in the vast majority of cases within seven days of a deposit taker failing. Remaining claims, which are likely to be more complex, are to be paid within twenty working days. Each account holder is also treated as an individual case which effectively doubles the limit payable to £170,000 for an account jointly held between two people.

After being informed about the new rules, 64% of those questioned support the changes. Some 13% say they will be directly affected, though the actual number is much lower, and a further 51% support them, even though they admit they will not be directly affected. Only 27% say they will not make any difference to them.

‘The new rules will better protect savers if their bank, building society or credit union goes bust. The £35,000 increase provides a big boost in FSCS protection for UK consumers and should protect the vast majority of savers,’ said Mark Neale, chief executive of the FSCS.

‘It’s important for consumers to be aware of these changes and the FSCS will be working alongside all deposit-taking institutions, to ensure that consumers know about the new limit and faster payout times. The rise to £85,000 is good for consumers and consumer confidence,’ he added.