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Barnett Waddingham
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Play your FSCS cards right: deposit protection limit rises to £85,000

Published by Andy Leggett on

If you are feeling a sense of déjà vu, it’s quite possibly due to our blog of just over a year ago, advising that the Financial Services Compensation Scheme (FSCS) deposit protection limit had just been cut from £85,000 to £75,000 with effect from 1 January 2016.

The FSCS protects certain consumer savings and investments in the event of a firm’s failure.

EU regulations require non-euro member states to adjust their deposit protection limits every five years to the equivalent of €100,000 and last year’s cut was simply due to a regular review.

Now, with effect from 30 January 2017, the FSCS limit has risen back up to £85,000. Joint accounts will also benefit from the rise with a new limit of £170,000.

You could be forgiven for thinking that the members of the Bank of England’s Prudential Regulatory Authority (PRA), which sets the limit, were once fans of Bruce Forsyth’s ‘Play Your Cards Right’. The changes seem reminiscent of a tense series of higher or lower than a seven or eight.

In fact, European Union (EU) regulations require non-euro member states to adjust their deposit protection limits every five years to the equivalent of €100,000 and last year’s cut was simply due to a regular review.

However, significant fluctuations in exchange rates may trigger further reviews and, following last June's referendum vote that the UK should leave the EU, the value of the pound plunged against the euro.

Before consulting on the change last November, the PRA said it considered a structural shift in the exchange rate had occurred, adding: ‘These events were unforeseen when the UK limit was reduced in 2015 [taking effect from 1 January 2016]. The PRA will continue to monitor fluctuations in the exchange rate but, barring unforeseen events, will seek to avoid making further adjustments to the deposit protection limit.’

This suggests that SIPP and SSAS members can expect that deposits in the accounts of qualifying banks, building societies and credit unions will be covered by the new, higher limit for some time to come.

You can learn more about the FSCS from their website.


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About the author

  • Andy Leggett

    Andy manages the SIPP business development team. He is also a media spokesperson and the main liaison for SIPP with the central marketing team. Andy continues to be involved in the development of the Barnett Waddingham SIPP proposition.

    View Biography

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