Financial Services Compensation Scheme

(asked on 21st July 2015) - View Source

Question to the HM Treasury:

To ask Mr Chancellor of the Exchequer, for what reasons he proposes to reduce the upper limit of compensation payments for the Financial Services Compensation Scheme.


Answered by
Harriett Baldwin Portrait
Harriett Baldwin
This question was answered on 7th September 2015

The Deposit Guarantee Scheme Directive (DGSD) is a single market measure to ensure that depositors are entitled to the same level of protection wherever they deposit their money, and that UK firms are not competitively disadvantaged in relation to firms in other EEA jurisdictions.

As a result of the current strength of the pound in relation to the euro, it has been necessary for the Prudential Regulation Authority to review the sterling coverage limit. However, the Government has taken action to ensure that UK depositors are not exposed to a sudden reduction in the level of protection they receive.

HM Treasury has laid a statutory instrument to ensure that depositors who are currently entitled to £85,000 of protection from the Financial Services Compensation Scheme will continue to be until 31 December 2015.

This will ensure that there is sufficient time available for depositors to be made aware of the changes, and to take such steps as they feel necessary to manage their financial affairs appropriately in light of this change. More than 95% of UK retail depositors are expected to remain unaffected by the change to the coverage limit.

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