In the UK, bank deposit protections are provided through the Financial Services Compensation Scheme (FSCS). The FSCS offers a safety net for consumers in the event that a bank or financial institution fails. Key points about deposit protection in the UK include:
1. Protection Limit:
The FSCS protects up to £85,000 per person, per financial institution. For joint accounts, the protection is doubled to £170,000.This protection covers deposits with UK-regulated banks, building societies, and credit unions.
2. Temporary High Balances:
For certain life events, such as selling a house or receiving a large inheritance or insurance payout, the FSCS provides protection for temporary high balances of up to £1 million for up to six months. This gives additional protection for larger sums that may be temporarily held in accounts.
3. Coverage:
The FSCS covers various types of accounts, including savings, current accounts, ISAs, and other deposit-based accounts.FSCS protection is only available for institutions authorised by the UK’s Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and PRA.
4. What’s Covered:
The scheme covers cash deposits if a bank or building society fails, meaning customers are reimbursed their protected amounts without needing to take legal action.
5. Exclusions:
Not all financial products are covered by FSCS. Investments, insurance, and certain complex financial products may not fall under the same guarantees.
This scheme provides significant protection and is designed to maintain confidence in the UK’s financial system.
