At the height of the banking crisis Enable’s IFAs know that many savers were reassured by the knowledge that £85,000 of cash was protected by the FSCS to customers of banks, building societies and credit unions should they collapse. It was the near collapse of Norther Rock in 2007 that saw policymakers take action on deposit protection. At the time, it was the Labour government that moved to guarantee 100 % of £35000 of saving replacing a previously tiered system. It was increased to £50,000 during the 2008 banking crisis and £85,000 at the end of 2010.
But the Bank of England has recently been forced cut by £10,000 that amount, because of the slump in the euro over the past five years. The guarantee will soon cover just £75,000 per account rather than £85,000. The Bank has to reduce the cover to bring the UK into line with the rest of the EU, which has set a threshold of saver protection at €100,000. Changes in the value of the euro since then mean the Bank has to alter the conversion rate used to translate euros into pounds at the Financial Services Compensation Scheme (FSCS).
Danny Cox, chartered financial planner at Hargreaves Lansdown, said: “This is absolutely bonkers. Savers are already suffering rock bottom interest rates, and now to add insult to injury the safety of that cash is being undermined”. If you have worries about where you are holding your cash Enable’s IFA’s in Bishop’s Stortford can talk you through your options.
Issued by: Enable Independent Financial Life Planners 25c North Street, Bishops Stortford, Herts CM23 2LD Telephone: 01279 755950 – Fax: 01279 657339 Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us. NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE