Four in five unaware savings guarantee will be slashed

Updated
Concept of troubled finances piggy bank with hole being sawed from under neath
Concept of troubled finances piggy bank with hole being sawed from under neath



The vast majority of Britons have no idea the level of their savings protected by the Government is set to tumble by £10,000, a new poll has found.

Today marks 100 days until the Financial Services Compensation Scheme (FSCS) reduces the amount of savings it will reimburse should a bank go under from £85,000 to £75,000.

However, peer-to-peer lender RateSetter has found that 83% of people were unaware of the impending change, while 8% mistakenly believed the FSCS protects more than £85,000.

While the vast majority of households have nowhere near £75,000 set aside, FSCS data suggests up to one in 20 will be affected by the lower threshold so some savers could be at risk.

The reduced threshold, which is being introduced on January 1 2016, will bring the UK more in line with the 100,000 euro guarantee offered in the EU.

It is worth noting that the £75,000 is available to each save, so a joint account would be covered for £150,000.

The compensation also applies to each banking group. This means a saver could hold £75,000 in one bank and £75,000 in another separately-owned bank and still be 100% covered.

Commenting on the findings, RateSetter chief executive Rhydian Lewis said: "With the reduction in the FSCS limit just 100 days away, the clock is ticking.

"Anyone in the fortunate position of having more than £75,000 in savings will want to use this time to take a good look at whether their money is appropriately allocated.

"For many people, that might mean splitting savings between different banks and building societies. But some have told us that lower FSCS protection will prompt them to seek a better return on money above the new limit – and perhaps this is one of the reasons why we are seeing increasing levels of investment in peer-to-peer platforms such as RateSetter."

Savers can check whether they are covered by the FSCS on their site by visiting their website.



Summer Budget 2015: The Highlights
Summer Budget 2015: The Highlights

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