Friday, 10 July 2015

Savers' Protection to Reduce.

The strength of sterling against the beleaguered euro brings advantages, most obviously for the holidaymaker who frequents the Eurozone. Not so pleased are the UK exporters who find that their products are becoming less and less competitive. Now savers are being hit.

The Financial Services Compensation Scheme will be reducing the protection it affords savers from £85,000 to £75,000 with affect from 1st January 2016. This reduction is required under the terms of the EU Deposit Guarantee Scheme because the limit of protection is defined in euros, [€100,000] and £85,000 is now worth comfortably more than €100,000. The six month lead in period is deemed sufficent for the million or so savers who have managed to squirrel away more than £75,000 in an account covered by the scheme to organise their finances in such a way that they can retain last resort protection for all of their funds. Appropriate dispensations will apply to fixed term accounts so that monies can be withdrawn even though the maturity date for the account does not occur before the end of the calendar year. Whether savers withdrawing funds from fixed rate bonds will manage to achieve equivalent interest rates is doubtful. The fruits of prudence have shrivelled away rather.




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