The Financial Services Compensation Scheme (FSCS) offers a vital safety net for savers.
This government-backed scheme protects the first £85,000 of savings if a bank or building society collapses.
This doesn’t just apply to UK-based institutions like Lloyds or Nationwide. Banks outside the European Economic Area that offer savings products in the UK have to sign up to this scheme.
European banks can offer ‘passport’ arrangements to their own safety net schemes. These offer broadly the same level of cover, but savers would have to apply via that country. However, in practice many are full members of the FSCS.
The £85,000 limit covers all brands under the same banking license. So, if you have money in accounts with both Halifax and Bank of Scotland – part of the same group – make sure the total doesn’t exceed £85,000 to ensure maximum protection.
The limit applies per person, so joint accounts are protected up to £170,000.
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