Compensation limits for bank deposits

Topic: Compensation limit for bank deposits

What happens if your bank becomes insolvent and you stand to lose any funds deposited?

The bank deposit guarantee limit is the amount of money that is guaranteed, for savers in UK banks and building societies, should the institution become insolvent. The Financial Services Compensation Scheme (FSCS) guaranteed amount is currently £85,000 per person, per authorised bank or building society.

There is additional protection available to savers with certain types of temporary high balances, for example proceeds from a house sale, benefits payable under an insurance policy and inheritances. The additional FSCS protection covers amounts of up to £1m per depositor per life event and is available for up to six months. The FSCS offers unlimited cover for personal injury claims.

The limit is enough to cover the deposits of more than 95% of all savers in the UK. However, savers with more than £85,000 should consider opening multiple bank accounts with separate banks and building societies in order to increase their guaranteed savings limits. The FSCS was set up mainly to assist private individuals, although some businesses and small local authorities (such as parish councils) are also covered. The compensation limit is doubled for joint account holders.

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