Savers: Act now to protect your cash before EU changes to bank deposit protection rules come into force in January

Annabelle Williams
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New EU rules come into force in January, changing the amount of money protected in each bank account (Source: Getty)

Savers should act now to ensure their deposits are protected ahead of new rules coming into force next year.

Cash held in bank accounts will only be protected up to £75,000 per person, per account from the 1st January. This is cut from the existing £85,000 protection which has been in place. Deposits held in joint accounts will be protected up to an £150,000 limit, down from the current £170,000.

The rules are part of the Financial Services Compensation Scheme (FSCS) which helps people get their money back in the event of a bank or financial provider going bust. They are changing because of an EU directive which sets the amount of money local regulators can protect.

It fixes the limit at €100,000 or its equivalent in member countries’ currency, so as the euro has fallen the EU has chosen to change the protection limit. The limit was raised several times during the financial crisis to reassure savers their money would be safe, and this is the first time it has been cut.

“[The government] was left shouldering a heavy load after the last financial crisis so we can’t rely on them to bail out any bank, building society or credit union that fails again, so you need to make sure your money is fully covered by the FSCS,” says Hannah Maundrell of


Although the rule change seems simple, it is complicated by a legal technicality which means the £75,000 cover limit is shared by banks with the same licence from regulator the FCA. For example, HSBC and First Direct operate under different brands but have a single banking licence. Savers with money in two accounts spread across both will only be protected up to £75,000.

Bank of Scotland also shares a licence with several other institutions including Halifax. Savers with cash deposits above £75,000 in several accounts should check if they are protected.

New rules have also been ushered in to protect people during temporary periods of very high cash balances – such as after selling a property or following a divorce settlement. A limit of £1m per account will apply in these cases, which means people won't have to spread the money around accounts in different institutions.

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