Savers are not aware of cash guarantees

Tim Wallace
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ONLY half of British consumers realise their savings are protected by a government guarantee, according to a new study out today from the Financial Services Compensation Scheme (FSCS).

The guarantee is meant to boost confidence in banks and prevent runs on institutions when customers are worried about their stability.

But if only half of people know it is there, it suggests the scheme is not supporting the system as hoped.

Deposits of up to £85,000 are protected by the scheme, which gives consumers and small firms their money back in less than seven days if a financial institution fails.

By only 51 per cent of people are aware of the set up – a lack of awareness which threatens to undermine the scheme.

The study also found 33 per cent of people still think well-known financial services firms will never go out of business, despite the financial crisis.

Nonetheless, 75 per cent say they are more cautious with their money since the credit crunch.

The FSCS has been used in recent years – it has paid out more than £26bn since 2001, with notable payouts coming from the failure of Icelandic banks as well as Bradford and Bingley.