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Deposit protection under FSCS set to rise to £85,000

The FSA is proposing to increase the level of deposit protection available under the Financial Services Compensation Scheme from £50,000 to £85,000 in line with EU requirements.

The increased compensation limit will apply from December 31 to comply with European rules which require member states to set maximum compensation for depositors at the equivalent of euro100,000.

Member states are allowed to set the limit in their national currencies and to round up to within euro 2,500. In addition, the FSA has chosen to round the conversion to the nearest £5,000.

The FSA has reached the £85,000 figure by calculating the limit based on the currency conversion as at October 1 to allow time for consultation. If currencies fluctuate significantly, member states can review the limit.

The FSA says dual protection, which offers separate protection to customers holding accounts with building societies or mut-uals that merge, will end on December 30.

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