Personal Finance

How safe is my money: FSCS regulations explained

Thu.30.Aug.2012 BST

From Friday 31st August, all UK authorised banks, building societies and credit unions will be obliged to tell customers their savings and deposits are protected by the Financial Services Compensation Scheme (FSCS) if they are members of the scheme.

Under the new FSA regulations they will be required to display information prominently by putting posters and stickers in branches, as well as information on their websites, to reassure their customers that their money will be safe if they go bust.

The new regulations have been brought in to stop repeats of the scenes witnessed five years ago when confused Northern Rock customers took to their branches to find out if their money was safe because of a lack of awareness of the systems in place to protect them.

FSCS protects consumers if banks, building societies or credit unions go bust and guarantees current and savings accounts to the tune of £85,000. Since 2001 it has helped more than 4.5 million people and paid out more than £26 billion. It covers the full range of financial services.

Banks, building societies and credit unions have to display compensation stickers or posters in branch windows, along with a sticker at the cashier’s window or desk, and a further poster in a prominent position inside.

The UK branches of foreign banks from the European Economic Area (EEA) have to specify that their customers are not covered by FSCS and clearly state which national scheme provides protection.