Finance News

FSCS increases protection for deposits of up to £1m

Rozi Jones
|
6th August 2020
Protection
"The coronavirus pandemic has been very worrying for everyone, and people are understandably concerned about the possibility of losing their temporary high balance should their deposit taker fail."

The FSCS has temporarily increased its Temporary High Balance (THB) protection for deposits of up to £1m from six to 12 months for deposit-taker failures occurring from today.

THBs are exceptional and short-lived deposits resulting from certain major life events including money deposited in preparation for buying a main residence; money paid in relation to a divorce or dissolution of a civil partnership; a redundancy payout; and compensation in respect of a person’s death.

The Prudential Regulation Authority (PRA) has temporarily extended FSCS coverage for THBs in response to the impact of Covid-19 on the residential property and investment markets, in recognition that some people have reduced access to banking services.

For deposit-taker failures after 6th August 2020, the extension will apply to both new and existing THBs received. Money deposited into an account with an authorised UK bank, building society or credit union in February 2020, with the six-month THB coverage due to end in August 2020, will now be protected until February 2021. Similarly, if a qualifying THB is deposited in September 2020, coverage would run until September 2021, as opposed to March 2021.

Caroline Rainbird, chief executive of the FSCS, said: “The coronavirus pandemic has been very worrying for everyone, and people are understandably concerned about the possibility of losing their temporary high balance should their deposit taker fail. The temporary extension of FSCS’s protection from six to 12 months will do much to reassure them should the worst happen during these uncertain times.”

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