"While the FSCS tinkers around yet again with the level of protection it provides, it is abundantly clear that what people really want is better returns on their savings."
The FSCS currently protects up to £75,000 of deposits held in a bank or building society, but this will return to £85,000 from Monday 30th January.
According to RateSetter’s research, only 4% of people in the UK have more than £75,000 in savings and therefore stand to benefit from the increase in protection. More than two-thirds of people (67%) have £10,000 or less in savings.
The FSCS limit was reduced from £85,000 to £75,000 in January 2016 following changes in the pound/euro exchange rate, but RateSetter research carried out at that time found that just a quarter of savers were aware of it.
Asked whether they would rather have a more protection for their savings or earn a higher rate of return, the vast majority of savers favoured the latter, with 69% saying they would rather earn 1 percentage point more in interest than have an extra £10,000 of FSCS protection.
Rhydian Lewis, CEO and co-founder of RateSetter, commented: “While the FSCS tinkers around yet again with the level of protection it provides, it is abundantly clear that what people really want is better returns on their savings.
“With record low returns on savings that can’t even match inflation, it’s no wonder that more people are deciding to put some of their money to work, by accepting some risk in exchange for a higher rate of return.”
