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FSA reviews protection for temporary high balances
by Gill Montia
Story link: FSA reviews protection for temporary high balances
The Financial Services Authority (FSA) is proposing changes to the Financial Services Compensation Scheme (FSCS) that will provide extra protection for people who have high deposit balances in their bank accounts for up to six months.
Under the current FSCS regime, the maximum deposit protected is £50,000 per individual, per financial institution.
However, the FSA is mindful that some bank customers occasionally have balances far in excess of this amount.
This might, for example, occur when someone has sold their home or received an inheritance or pension lump sum, or an award for personal injury.
The regulator’s director of banking, Thomas Huertas, explains: “Our proposals will protect people who have little or no choice about holding a high balance for a limited period over the current FSCS limit of £50,000 before they can diversify it, if they wish, between different institutions.”
He adds: “The FSCS is not intended to protect consumers who keep high account balances for a long period, so the extra protection will be time limited.”
The proposals recommend a time limit of six months for most circumstances and a monetary limit of £500,000.
However, for personal injury awards and settlements the new measures would offer unlimited protection over 18 months.
According to the regulator, this would reflect the fact that “personal injury awards are often intended to provide an income for the rest of the injured person’s life and that it may be difficult to assess for some time how the money should be allocated and invested”.
However, any changes to the current level of protection are not expected until the end of 2010 at the earliest and will need the approval of EU authorities.
http://www.bankingtimes.co.uk/310320...high-balances/
by Gill Montia
Story link: FSA reviews protection for temporary high balances
The Financial Services Authority (FSA) is proposing changes to the Financial Services Compensation Scheme (FSCS) that will provide extra protection for people who have high deposit balances in their bank accounts for up to six months.
Under the current FSCS regime, the maximum deposit protected is £50,000 per individual, per financial institution.
However, the FSA is mindful that some bank customers occasionally have balances far in excess of this amount.
This might, for example, occur when someone has sold their home or received an inheritance or pension lump sum, or an award for personal injury.
The regulator’s director of banking, Thomas Huertas, explains: “Our proposals will protect people who have little or no choice about holding a high balance for a limited period over the current FSCS limit of £50,000 before they can diversify it, if they wish, between different institutions.”
He adds: “The FSCS is not intended to protect consumers who keep high account balances for a long period, so the extra protection will be time limited.”
The proposals recommend a time limit of six months for most circumstances and a monetary limit of £500,000.
However, for personal injury awards and settlements the new measures would offer unlimited protection over 18 months.
According to the regulator, this would reflect the fact that “personal injury awards are often intended to provide an income for the rest of the injured person’s life and that it may be difficult to assess for some time how the money should be allocated and invested”.
However, any changes to the current level of protection are not expected until the end of 2010 at the earliest and will need the approval of EU authorities.
http://www.bankingtimes.co.uk/310320...high-balances/
