Widespread ignorance on savings rules

It's claimed just one in five consumers are aware of the new compensation limit for deposits and savings. Last year this limit was boosted to €100,000 (£85,000), right across Europe. Despite the uncertain climate, four in five of those questioned by the Financial Services Compensation Scheme (FSCS) were not aware the limit was £85,000, a new survey found.

Watch the detail

"The £85,000 limit is good news for every saver in the country, with 99% of accounts now covered," says Mark Neale, chief exec of the FSCS. "Although there have been no high profile failures over the last 12 months it is important for financial stability that savers are aware of the protection that is available to them," he says.'

However, the devil is in the detail. This limit might sound reassuring but it only applies to savings if an operator has their own licence. If a licence is shared across different brands - for example Intelligent Finance, Bank of Scotland and the Halifax all operate under the one licence - then you would be only covered up to £85,000 right across all those institutions.

And check again

In addition, Yorkshire Building Society own Norwich and Peterborough Building Society, plus internet bank Egg. There are apparent inconsistencies too: some banks do hang onto separate licences despite being owned by the same larger group - like Lloyds TSB, owned by HBOS. If you are concerned, the Guardian newspaper has an excellent guide to help you spread risk.

"As only those financial institutions authorised by the FSA are covered by the FSCS guarantee it is vital that customers check their financial products are safe and remain within the limit. Although the industry has made significant progress in the information it provides to consumers about the FSCS, there is still much more to do," warns Neale.
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