UK Deposit Protection Limit to Rise to £120,000 in December
In This Article
HIGHLIGHTS
- The UK deposit protection limit will increase from £85,000 to £120,000 starting December 1, 2023.
- The increase, confirmed by the Prudential Regulation Authority, is the largest since 2017 and reflects current inflation data.
- The Financial Services Compensation Scheme (FSCS) will automatically apply the new limit per person, per authorised firm.
- Temporary high balances protection will also rise from £1 million to £1.4 million for six months.
- Consumer groups and banking industry representatives support the move, citing enhanced consumer confidence and inflation adjustments.
Starting December 1, 2023, UK bank customers will benefit from an increased deposit protection limit, rising from £85,000 to £120,000. This significant change, announced by the Prudential Regulation Authority (PRA), aims to bolster consumer confidence amid rising inflation.
A Response to Inflation
The decision to raise the deposit protection limit marks the first increase since 2017 and is a direct response to the UK's current inflation rate of 3.8%. Initially proposed at £110,000, the limit was adjusted following consultations and inflation data analysis. Sam Woods, deputy governor for prudential regulation at the Bank of England, emphasized that this change is crucial for maintaining public trust in the financial system. "This change will help maintain the public's confidence in the safety of their money," Woods stated.
Enhanced Protection for Temporary High Balances
In addition to the deposit protection increase, the cap for temporary high balances will rise from £1 million to £1.4 million, covering significant life events like house sales or insurance payouts for up to six months. This adjustment ensures that consumers experiencing sudden financial changes are adequately protected.
Industry and Consumer Reactions
The Financial Services Compensation Scheme (FSCS), responsible for implementing these changes, assures customers that the new limits will apply automatically. Martyn Beauchamp, FSCS chief executive, noted, "This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000." Consumer advocacy group Which? and UK Finance, representing the banking industry, have both endorsed the move. Rocio Concha of Which? described it as "a sensible decision" that aligns with economic growth efforts without compromising consumer protection.
WHAT THIS MIGHT MEAN
The increase in the deposit protection limit is likely to enhance consumer confidence in the banking sector, potentially encouraging more savings. However, it may also lead to discussions on how such measures align with broader economic policies, especially as the government seeks to stimulate spending. Experts suggest that while the move is beneficial for savers, it could inadvertently lead to more funds being held in savings accounts, which might not align with the government's economic growth strategies. As the new limit takes effect, financial institutions and policymakers will need to monitor its impact on consumer behavior and the broader economy.
Related Articles
Reform UK to Reinstate Two-Child Benefit Cap Amidst Political Controversy
UK Clinical Trial on Puberty Blockers Paused Amid Safety Concerns
US Supreme Court Ruling on Tariffs Sparks Uncertainty for UK and Global Trade
UK Government Eases Deer Culling to Protect Woodlands and Farmland
UN Report: Sudan's El Fasher Siege Shows Genocide Hallmarks
Centrica Faces Profit Decline Amid Warmer Weather and Market Challenges
UK Deposit Protection Limit to Rise to £120,000 in December
In This Article
Daniel Rivera| Published HIGHLIGHTS
- The UK deposit protection limit will increase from £85,000 to £120,000 starting December 1, 2023.
- The increase, confirmed by the Prudential Regulation Authority, is the largest since 2017 and reflects current inflation data.
- The Financial Services Compensation Scheme (FSCS) will automatically apply the new limit per person, per authorised firm.
- Temporary high balances protection will also rise from £1 million to £1.4 million for six months.
- Consumer groups and banking industry representatives support the move, citing enhanced consumer confidence and inflation adjustments.
Starting December 1, 2023, UK bank customers will benefit from an increased deposit protection limit, rising from £85,000 to £120,000. This significant change, announced by the Prudential Regulation Authority (PRA), aims to bolster consumer confidence amid rising inflation.
A Response to Inflation
The decision to raise the deposit protection limit marks the first increase since 2017 and is a direct response to the UK's current inflation rate of 3.8%. Initially proposed at £110,000, the limit was adjusted following consultations and inflation data analysis. Sam Woods, deputy governor for prudential regulation at the Bank of England, emphasized that this change is crucial for maintaining public trust in the financial system. "This change will help maintain the public's confidence in the safety of their money," Woods stated.
Enhanced Protection for Temporary High Balances
In addition to the deposit protection increase, the cap for temporary high balances will rise from £1 million to £1.4 million, covering significant life events like house sales or insurance payouts for up to six months. This adjustment ensures that consumers experiencing sudden financial changes are adequately protected.
Industry and Consumer Reactions
The Financial Services Compensation Scheme (FSCS), responsible for implementing these changes, assures customers that the new limits will apply automatically. Martyn Beauchamp, FSCS chief executive, noted, "This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000." Consumer advocacy group Which? and UK Finance, representing the banking industry, have both endorsed the move. Rocio Concha of Which? described it as "a sensible decision" that aligns with economic growth efforts without compromising consumer protection.
WHAT THIS MIGHT MEAN
The increase in the deposit protection limit is likely to enhance consumer confidence in the banking sector, potentially encouraging more savings. However, it may also lead to discussions on how such measures align with broader economic policies, especially as the government seeks to stimulate spending. Experts suggest that while the move is beneficial for savers, it could inadvertently lead to more funds being held in savings accounts, which might not align with the government's economic growth strategies. As the new limit takes effect, financial institutions and policymakers will need to monitor its impact on consumer behavior and the broader economy.
Related Articles
Reform UK to Reinstate Two-Child Benefit Cap Amidst Political Controversy
UK Clinical Trial on Puberty Blockers Paused Amid Safety Concerns
US Supreme Court Ruling on Tariffs Sparks Uncertainty for UK and Global Trade
UK Government Eases Deer Culling to Protect Woodlands and Farmland
UN Report: Sudan's El Fasher Siege Shows Genocide Hallmarks
Centrica Faces Profit Decline Amid Warmer Weather and Market Challenges