The Financial Services Compensation Scheme (FSCS) has reacted to the current COVID-19 situation so as to extend the protection for deposits of up to £1m in UK-regulated banks, building societies and credit unions following a divorce under the 'temporary high balance' provisions from the previous six month time period to 12 months. The normal level of protection is £85,000 per person, per financial institution, if the provider were to go bust. This is helpful in situations where some people have reduced access to banking facilities, particularly given the economic uncertainties created by COVID-19. However, from 1 February 2021, the protection will revert back to six months. Hopefully the risks and difficulties at that stage will be less and indeed it may be a safer, longer-term approach if individuals organise their finances on the basis of the normal level of protection.
Up to £1m deposited with lenders after 'major life events' will be protected for a year rather than the usual six months, due to the impact of Covid-19.
Originally published 13 August, 2020
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