On 20 September 2017, a new industry-wide agreement hit the financial world which aims to increase awareness of deposit protection for customers.
What is deposit protection?
The Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per person, per firm and protects investments up to £50,000 per person, per firm.
The aim of the FSCS is to safeguard customers of UK banks and building societies which collapse. Many will remember the photos of customers queuing for hours outside branches of Northern Rock back in 2007. Since 2001, the FSCS has paid out £26 billion to more than 4.5 million customers,* many of whom were affected by the banking crisis, including savers with Bradford & Bingley.
How is it changing?
Although banks and building societies are already obliged to display the FSCS badge in branches, on posters and leaflets under the Prudential Regulation Authority regulations, this requirement did not extend to their digital platforms.
In an increasingly digital age many customers undertake their banking online, which has caused the FSCS (supported by UK Finance and the Building Societies Association) to extend its coverage so that the obligation to display the FSCS badge will in future apply to consumer:
- Mobile banking apps
- Customer information sheets
Guidance is being issued to banks and building societies with a deadline of 18 months to implement the new rules. However, some individual banks and building societies have already started rolling out the changes.
The expectation is that the FSCS badge will now be used consistently across all of the channels that they employ, including advertising.
It is hoped that the move will make customers more aware of the protection that they have. In an increasingly unpredictable world as we near Brexit, this should continue to offer reassurance and comfort to the vast majority of savers.