FSCS Limit

colin79666

The FSCS limit was changed at the beginning of the year as the pound was strong against the Euro. EU rules mean the government must protect deposits up to €100k and review the limit every 5 years.

Now obviously the 5 years hasn't come round again but banks aren't looking super stable with all that is going on in the economy since the BREXIT vote and the pound has moved significantly against the euro. Based on todays exchange rate the limit would be more like £90k than the £75k it was lowered to on Jan 1st. With several bank mergers, particularly since 2008, there are fewer actually separate institutions to save with, especially for older folks who might not have access to new challenger online banks and they are precisely the group most likely to have significant savings from long term prudence or perhaps downsizing their house.

Looking at the FSCS website there appears to be some scope for a review if there are significant events:

The directive requires the PRA to review the limit every five years. The limit of £75,000 is unlikely to change before then, unless there are unforeseen events such as significant currency fluctuations.

I'm sure no one would find it easy to argue we haven't had such an event in the past quarter so do you think the government are likely to step in and review the position now or ride it out while interest rates are still low and they don't have an election looming?

jimjames

I think it's extremely unlikely any change would be made.

If anything the next change will be down not up as the limit came from EU so seems more likely to me that it would revert to £50k that it was before.

The number affected is tiny in relation to the population so it's a non issue for most people who don't even have £2000 to their name.

TheShape

I can't imagine this being a priority.

The number of people with over £75,000 in savings is likely to be very small.

Very easy to find two institutions if you have £75k - £150k or three if £150k to £225k.

How many individuals have more than £225k (£450k for couples) in the bank?

bowlhead99

I hope it doesn't go up as I have no reason or desire to deposit more than £75k for safekeeping in any one institution, and the increased cost of funding the insurance scheme for the institutions would adversely affect the cost of, or interest rates offered on, any banking services I might like to have.

colsten

I can only see the protection limit go down in future - though not for a few years hence.

PeacefulWaters

jimjames wrote: »

I think it's extremely unlikely any change would be made.

Possibly not, but the OP makes a great point.

If anything the next change will be down not up as the limit came from EU so seems more likely to me that it would revert to £50k that it was before.

The EU limit is €100,000 euros. It has been that since around 2010. The U.K. limit decreased to £75,000 because of the "strong" pound. This is due to be reviewed in 2020 but ther is a mechanism to bring that review forwards.

The number affected is tiny in relation to the population so it's a non issue for most people who don't even have £2000 to their name.

But it is an issue for those with £75k+.

Keep_pedalling

PeacefulWaters wrote: »

But it is an issue for those with £75k+.

Only if they are keeping such big chunks of their savings in cash, and I don't think must of us with reasonably high levels of savings do that.

jimjames

PeacefulWaters wrote: »

The EU limit is €100,000 euros. It has been that since around 2010. The U.K. limit decreased to £75,000 because of the "strong" pound. This is due to be reviewed in 2020 but ther is a mechanism to bring that review forwards.
.

Some short memories! Less than 10 years ago the limit was just under £32k. The increase has been way, way more than inflation.

At the start of the banking crisis in 2007 the maximum payout for depositors was just £31,700 per person, made up of 100% of the first £2,000 and then 90% of their next £33,000.
In October 2007 the FSCS limit was raised to £35,000 and then again a year later to £50,000.

http://www.bbc.co.uk/news/business-12093658

PeacefulWaters

jimjames wrote: »

Some short memories! Less than 10 years ago the limit was just under £32k. The increase has been way, way more than inflation.

At the start of the banking crisis in 2007 the maximum payout for depositors was just £31,700 per person, made up of 100% of the first £2,000 and then 90% of their next £33,000.
In October 2007 the FSCS limit was raised to £35,000 and then again a year later to £50,000.

http://www.bbc.co.uk/news/business-12093658

With the greatest respect, I know all that.

But I don't see the relevance in 2016.

The EU, the pound / euro exchange rate and Brexit are the only players I can see here.

jimjames

PeacefulWaters wrote: »

But I don't see the relevance in 2016.

The EU, the pound / euro exchange rate and Brexit are the only players I can see here.

That's my point and exactly why it's relevant now. If we are no longer bound by EU rules then the limit could well drop to pre-EU amount.

2010

If the banks were as strong as they should be, there shouldn`t be any limit on savings.

As for the argument that very few people have above £75k in cash,if it`s that small a number it doesn`t really matter about a limit.