FSA proposal to extend period for separate deposit protection limits

5th June 2009

The FSA introduced temporary rules, at the end of last year and at the beginning of this, which allow separate compensation cover for customers with deposits in two merging building societies and for customers whose deposits are transferred from a failed firm to another deposit taker where they already have an account. On 4 June 2009, the FSA announced that it proposes to extend the rules beyond their original expiry date of 30 September 2009, to 31 December 2010.

The temporary rules were introduced to alleviate concerns that customers with deposits in two merging societies, or whose deposits were transferred to another deposit taker, could find their combined savings exceeded the £50,000 maximum compensation limit provided by the FSCS. 

It remains the case that customers who subsequently deposit monies with a building society that has been the subject of a merger, or with a deposit taker to which there has been a transfer of deposits, will only be entitled to the usual FSCS coverage for deposits of £50,000.

The proposed extension is set out in an FSA consultation (CP09/16) which will end on 6 July 2009.