FSA increase limit of Financial Service Compensation Scheme

The Financial Services Authority (FSA) has increased the limit of Financial Service Compensation Scheme (FSCS) cover for deposits to 100% of the first £35,000 of each depositor's claim.

This increase applies from 1 October 2007.

The previous compensation limit was a maximum of £31,700 (100% of the first £2,000 and 90% of the next £33,000 of depositors' eligible claims).

Clive Briault, FSA Managing Director of Retail Markets, said: "At a time of market uncertainty it is important for consumers to know their deposits are properly protected. The action we have taken is designed to help reassure depositors with accounts up to £35,000 that they are 100% covered. The Government has indicated that it will propose further changes relating to financial services compensation arrangements in the UK designed to give consumers confidence that their savings and deposits are safe and secure.”

The FSA will work closely with the Government and the FSCS on the forthcoming review of compensation arrangements.

Reza Attar-Zadeh, Director of Savings at Abbey said: "We welcome the FSA's decision to introduce this guarantee. This will bolster confidence that savings are safe in British banks. Abbey savers have the added benefit of being backed by Santander, one of the best capitalised banks in the world, and the largest in the Eurozone by market capitalisation.

"Now is a strong time for savings with highly competitive rates across the market by historical standards - for example, Abbey pays up to 10 per cent AER on regular savings accounts, and up to 8.1 per cent AER on lump sum savings."