A survey conducted by the Financial Services Compensation Scheme suggests that as many as four fifths of UK savings account holders are unaware of the compensation limits for their deposits and savings.
New rules came into effect on the 31st December 2010 which set compensation limits for lost savings at £85,000 (€100,000). Four out five (21 per cent) of the people surveyed did not know what the limit was, although this is an improvement on the 17 per cent who knew about the change when it came into force a year ago it still represents a clear failure on the part of banks and financial services organisations to inform consumers of their rights.
The Financial Services Authority have stepped in to make sure information about how much compensation savers can claim in the event of an institution failing is prominently displayed in all banks, building societies and credit unions. Ever since Northern Rock collapsed in 2007 there has been much fear over what happens to consumer’s savings if a bank goes under, in spite of these fears the majority of consumers are apparently still unaware of how their money is protected by the compensation scheme.
Mark Neale, chief executive at the FSCS said: “The £85000 limit is good news for every saver in the UK, with 99 per cent of accounts now covered. Although there have been no high profile failures over the last 12 months for the sake of financial stability it is important for consumers to be aware of the protection available to them.”
The FSA has recently been consulting on new rules requiring organisations to display information about FSCS protection in all branches, making it easier for consumers to be aware of their rights and the protection afforded them. Since its creation in 2001 the FSCS has paid out over £25 billion in compensation to more than 4.5 million people..