If your bank collapses, the maximum compensation available to you is due to return to its previous limit of £85,000.
In July 2015, this limit was lowered to £75,000 after the Sterling rose against the Euro. However, since the UK voted to leave the EU, the sterling has fallen over 10% against the Euro.
Across the EU, the amount of compensation account holders and savers would be entitled to is set at €100,000. Under normal circumstances, every five years, this amount is recalculated in pounds sterling. However, the European directive present in this process allows for a more common assessment, where several problems often present themselves, such as currency fluctuations.
This decision gives the impression that the Bank of England believes the fall in the value of the pound isn’t just permanent just yet. The Financial Services Compensation Scheme covers an array of financial investments, including both current and savings accounts and cash ISAs.
Before July 2015, the threshold of £85,000 per person per bank was in place for up to five years. Chairman of the Treasury Select Committee, Andrew Tyrie, believed different – that this amount had been amended approximately seven times in the last decade, commenting, “The absurd situation, in which the UK is left vulnerable, at the discretion of the European Commission, to frequent changes in our deposit scheme, must be brought to an end. Brexit should give the UK the opportunity to set its own level of protection. We should take it.”
This idea has already been approved by both the Treasury and European Commission – The Prudential Regulation Authority, a sector of the Bank of England, is due to consult on these changes. The consultation closes on the 16th December 2016. Both banks and building societies are required to change the conditions on their publicity material by next summer.