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FSCS compensation limit jumps to £50,000

The FSA has increased the compensation limit for bank deposits from £35,000 up to a total of £50,000 for individual customer claims from October 7.

Customers with joint accounts will be eligible to claim up to £100,000.

The changes to the compensation limit are detailed in the Financial Services Compensation Scheme: Review of the scheme limits consultation paper, to be published later today.

The paper also sets out proposals to improve the overall scheme and to ensure consistency in respect of compensation limits for investment, insurance and home finance.

The FSA says it will consult on further reforms, including considering whether the compensation limit should be higher still, the speed with which the FSCS can pay compensation and the rules surrounding whether deposits are covered on a legal entity, a brand or an account basis.

FSA chief executive officer Hector Sants says: “There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday.

“This change ties in with the introduction of the Government’s Banking Bill in Parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector. In addition, the Chancellor has made clear that the Authorities will do whatever is necessary to maintain financial stability and protect depositors.”

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