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8 October 2008 Savings to be guaranteed up to £50,000

The Financial Services Authority (FSA) has raised the threshold of savings guaranteed if a bank goes bust from £35,000 to £50,000.

Deposits in joint accounts, meanwhile, will be protected up to £100,000 when the new rules come into force on Tuesday 7 October.

According to Chancellor Alistair Darling, the changes mean that 98% of all UK bank customers will now be protected under the Financial Services Compensation Scheme.

Peter Vicary-Smith, chief executive of consumer watchdog Which?, welcomed the decision but called for further clarity on the issue.

‘We think the scheme should offer even greater protection for depositors. We want to see payouts per brand, not per institution and for people to be automatically covered for amounts over £50,000 to cover one-off events like the sale of a house or an insurance payout,’ he said.

‘We also want people who hold savings and debts with the same provider to receive gross payouts as current provisions would see their debts deducted from any money they receive.’

The move follows the Irish Government’s decision to guarantee 100% of all bank deposits amid growing concern over the current turbulence in the financial sector.