There isn’t much to cheer savers at the moment: rock bottom interest rates and stubbornly high inflation have combined to keep returns on funds at a puny low.
But there has been some good news for those concerned that a second banking crisis may serve to compound problems. The ceiling on the amount of savers money that is safeguarded should a bank or building society collapse has risen from £50,000 to £85,000.
When the banking crisis first hit in 2007, the upper limit of compensation for savers was £31,700 per person, comprising 100 per cent of the first £2,000 and then 90 per cent of the next £33,000 of saving deposits. In October of that year the FSCS limit was raised to £35,000. A year later it increased again to £50,000. Now the limit is set at £85,000 of savings as from 31 December 2010.
As well as offering a higher level of protection, the new rules will also provide a quicker compensation service, with the much of the money to be paid within seven days and the rest within 20 days. The practice of reducing payouts by the amount of money that a saver might owe their savings institution ¬ in the form of a mortgage or other loan ¬ is scrapped.
For more information contact Bernadette Gibson at bernadette@jackross.co.uk or visit our Contact Page.