Following the announcement on 3 July 2015 that the existing level of deposit protection (£85,000) will change to £75,000 after 31 December 2015, on 31 July, the PRA announced new rules are intended to ensure depositors who may experience a decrease in the level of protection following the change to the Financial Services Compensation Scheme (FSCS) deposit protection limit are given the opportunity to adjust to the new limit, without incurring any penalty or loss of interest.
Those depositors who were previously (and continue to be) protected by the FSCS and who are contractually tied into products with balances above £75,000 (either currently or at product maturity) will be able to request to withdraw funds between the old and new limits without penalty, charge or loss of interest. Depositors will be able to request withdrawals until 31 December 2015 and firms are not required to action requests until 1 October 2015 but will need to return funds to depositors within two months of the request or by 31 January 2016 – whichever is the earlier date.
Practically, firms will need to consider:
- Amending posters and stickers which firms are required to display in branches and on websites to reflect the new limit. This must be done by firms as soon as practicable and in any event by 1 September 2015 latest (requirements for UK branches of euro firms are not affected);
- Amending the information sheet which firms are required to give out to depositors to refer to the new limit. This rule will not apply until 1 January 2016 and must be sent to depositors as soon as practicable after this date and by 1 July 2016 latest; and
- Their requirement to inform depositors of the change in the deposit protection limit using prescribed wording as soon as practicable and in any event by 1 September 2015.