Your bank savings protected by an extra £10k - thanks to Brexit
BRITISH savers are set to get an extra £10,000 in protection for their bank deposits, thanks to Brexit.
Savings money protection surged following the historic EU referendum
The Bank of England is proposing to hike the protection savers get under the Financial Services Compensation Scheme (FSCS) to a maximum £85,000, up from the £75,000 mandated by Brussels.
The FSCS reimburses savers for any savings or deposits lost if their UK bank, building society or credit union goes bust.
The reimbursement level was set at a maximum £85,000 in 2011, or up to £170,000 for joint accounts.
Under EU laws, savings protection was drastically slashed
Incredibly, under EU rules it was slashed to just £75,000 from the start of this year, giving savers less protection.
Setting the level of deposit protection based on the exchange rate from aforeign currency never made much sense
The EU Deposit Guarantee Schemes Directive forces member countries outside the eurozone to adjust their deposit protection limits to the equivalent of €100,000 every five years.
At the last review sterling had risen strongly against the euro, forcing a cut in compensation levels.
Now the Bank of England is proposing to restore the limit to £85,000 in the wake of the EU vote and subsequent drop in sterling.
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The proposed change would take effect from the end of January 2017
It has also pledged to avoid making unnecessary adjustments in future.
David Black, banking specialist at DJB Research, said changing cover levels in line with exchange rates confuses consumers, who had no idea what protection they had.
The proposed change would come into force from January 30, 2017.
Danny Cox, chartered financial planner at Hargreaves Lansdown, said: “Setting the level of deposit protection for UK savers based on the exchange rate from a foreign currency on a seemingly random date never made much sense.”