A change proposed to banking rules will considerably increase the amount of savers’ money which is protected when a bank or a construction company is under.
The planned increase has taken into account inflation since the limit was set for the last time in 2017, the organization which oversees British banks, said the prudential regulation Authority (PRA).
If a financial institution fails, the deposit protection program means that customers can currently claim the first £ 85,000 of their savings. This would increase to £ 110,000 as part of the new proposal.
The plan is subject to a consultation, but if it is adopted, the upper limit will apply from December 1, 2025.
Rob Mansfield, an independent financial advisor at Rootes Wealth, said that the reduction in the limit in accordance with inflation was welcome and “excellent news for savers and for confidence in our banking system”.
Currently, savers are protected up to £ 85,000 per person, per institution. For a joint account, this means that protection increases to £ 170,000.
It is advisable for savers more than that of deposit to spread their money between different banks or construction companies in order to ensure that it is covered by the remuneration regime, which is managed by the Scheme of Remuneration of Financial Services (FSCS).
During the 25 years which followed its foundation, the FSCS paid more than 20 billion pounds Sterling to depositors, mainly following the financial crisis of 2008.
Martyn Beauchamp, Director General of the FSCS, said it was important that the limit was examined regularly to ensure that it remained “appropriate and relevant”.
The proposal is part of a large -scale consultation on the protection of deposits which could also see the limit of “high -level temporary complaints” going from 1 million sterling pounds to 1.4 million sterling pounds. This covers customers who have large amounts in an account because they move or have received a payment from an insurance policy.
Sam Woods, CEO of PRA, said that customer confidence in the financial system was “an essential basis for economic growth”.
The government has called on regulation organizations to revise its strategies to promote economic growth.
Rocio CONCHA, Director of Policy and Plagoyer in the consumer group who?, Describes change as “a reasonable decision”.
“At a time when the government and regulators go to growth, this decision recalls that good consumers’ protections and economic growth go hand in hand.”
