The Law is changing!IMPORTANT! Data protection laws are changing soon. Don’t miss out – tell us how you’d prefer to be contacted now.
Banks must display compensation signs
Published 29 May 2012 by Helen Gradwell
Your money is protected up to the level of £85,000 in British banks, but there may be some confusion over different banking brands and EU-based institutions.
From the end of August, banks must make it clear to customers how much money they would get back if the bank went bust. They have been told to display notices telling savers about the level of protection their money would enjoy if that happened.
There is some confusion among customers over whether their money is protected when it's saved with different banks. The Telegraph goes into some detail.
Sometimes, different brands are actually part of one 'financial institution' - and only £85,000 can be protected in each institution.
For example, Halifax and Royal Bank of Scotland count as one institution, even though savers may assume that they are separate entities.
People who save with a bank that is covered by a foreign scheme may also experience some confusion. These EU-based institutions - such as ING Direct, Bank of Cyprus and Anglo-Irish Bank - are covered for €100,000. This is currently the equivalent of £80,000, but savers would have to claim their money back from the country in question.
So, when the new rules come in, notices in banks will explain all of this to try and avoid confusion. The FSA (Financial Services Authority) has told building societies, credit unions and banks to put notices up in branches and on websites that explain clearly how savers' money is protected.
The FSA's director of UK banks and building societies, Andrew Bailey, has explained how this would work. He said: "Banks, building societies and credit unions will have to display these compensation stickers or posters in the branch window along with a sticker at the cashier's window or desk and a further poster in a prominent position inside."
The notices will explain what happens if the bank is an EU-based institution, as well as whether a banking licence is shared with other brands.
Mr. Bailey added: "Customers need to feel confident about their money and to do this they need to know what the compensation limits are and which scheme would provide cover in the event of a bank, building society or credit union failure."