Is my money safe in the bank? Important detail in FSCS protection scheme to be aware of

The Financial Services Compensation Scheme (FSCS) remains open and fully operational, it has confirmed, despite the coronavirus crisis having hit the UK. This is a scheme which protects a person when financial firms fail.


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It was set-up by parliament and is funded by the financial services industry.

This compensation scheme is a “completely independent” and free service, with savers keeping “all the compensation” they are owed when they claim directly through the scheme.

So, how does the FSCS protection work when it comes to compensation in terms of banks, building societies and credit union?

The FSCS explains the compensation limits for if a firm failed after January 1, 2017.

Should a person hold money with a UK-authorised bank, building society or credit union that fails, then FSCS will automatically compensate them.

This is up to £85,000 per eligible person, per bank, building society or credit union.

The limit rises to £170,000 for joint accounts.

Should a person has a certain life event which causes them to end up with a temporary high balance in their bank account, then they will be protected for a specific period of time.

“We protect certain qualifying temporary high balances up to £1 million for up to six months from when the amount was first deposited,” the website explains.

People who require compensation in this situation are advised that they don’t need to do anything to get the money, as FSCS will compensate them automatically.

“You can easily see how much of your money is protected by using our protection checker,” it adds.

It’s important to be aware that the £85,000 limit on protection is per eligible person, per financial institution.


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The FSCS website explains that this means that placing money in excess of this limit in a number of accounts which are part of the same banking group could have an impact on compensation.

“Where you hold your money could affect how much compensation you’re entitled to,” it says.

“If you have money in multiple accounts with banks that are part of the same banking group (and share a banking licence) we have to treat them as one bank.

“This means that our compensation limit applies to the total amount you hold across all these accounts, not to each separate account.”

That said, there is a way to ensure that the compensation limit applies to each individual account, as the website points out.

It states: “For our compensation limit to apply to each individual account, you’d need to hold money with different banks that don’t share a licence.

“You can search the financial services register on the Financial Conduct Authority’s website to see which banks share a licence.”

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