Savings guarantee rises to £50,000

6 October 2008

The upper limit on the amount of savings that will be safeguarded in the event of a bank or building society failing has risen from £35,000 to £50,000, the Financial Services Authority (FSA) has announced.

Joint accounts are safeguarded up to £100,000.

The new limit applies as from 7 October.

The FSA is believed to be looking at raising the threshold even higher, as well as at the speed with which any compensation is paid and the rules surrounding whether deposits are covered on a legal entity, a brand or an account basis.

Hector Sants, the FSA’s chief executive officer, said: “There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday.

“This change ties in with the introduction of the Government's Banking Bill in Parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector. In addition, the Chancellor has made clear that the Authorities will do whatever is necessary to maintain financial stability and protect depositors.”

However, the government is under growing pressure to follow the German and Irish leads and to guarantee all the savings of depositors in British banks.