coins_in_handGiven the recent monopolisation of the limelight by the Greeks and George Osborne, one might be somewhat forgiven for not noticing the changes announced to the more conspicuous Financial Services Compensation Scheme (FSCS), which guarantees UK depositors money.

The amount of savings now guaranteed by the UK Government under the FSCS in the event of a bank failure will drop from £85,000 to £75,000 from the 1st January 2016.

“Why?” you rightly ask.

Well, across the EU the deposit guarantee scheme is set at €100,000. For those countries that don’t use the euro they are required to keep the amount they guarantee in their own currency at a roughly similar level to €100,000. When the FSCS first came into being this was £85,000.

However following the recent significant decline of the Euro, €100,000 is now worth roughly £75,000 (or less). The theory goes that if one country guaranteed significantly more savings capital than others then individuals would place more money in bank accounts in that country giving banks in that country an unfair competitive advantage over other EU countries. Of course, the Government of that country may well also find itself guaranteeing significantly more assets than its neighbours.

What can I do about it?

Ultimately, the result is you, as a UK citizen, now find through no fault of your own, (in fact if anything you should be patting yourself on the back for your contribution to the rise in the pound and relative strength of the UK economy) that your hard earned savings are less protected than before.

“That’s unfair” you say. Well, there is a solution.

The NS&I Direct Savers Account allows you to save up to £2 million (at a not too shabby 1.1% gross) and crucially, here comes the punchline, NS&I products are backed (guaranteed) by the Treasury.

Peace of mind restored, we can hand back the limelight to George.

Please note: Whilst the NS&I Direct Savers Account may be suitable for some individuals, this article should not be construed as financial advice and you should seek full independent financial advice which considers your individual circumstances before making any financial decisions on the back of this article.

RMT Ref 116/07.15/SL

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