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Four out of five consumers unaware of FSCS protection

Only 21 per cent of consumers are aware of the compensation limit for deposits and savings, new research by the Financial Services Compensation Scheme has shown.

According to a research study carried out by the compensation scheme, four out of five consumers are not aware of the compensation limit. The limit was set at £85,000 following the introduction of new rules across Europe in December 2010, which increased mandatory compensation limits across the continent to €100,000.

Despite the low figure, FSCS claimed the awareness level is up from last year, when just 17 per cent of people responded to a similar study saying that they knew the improved limit ahead of it coming into operation.

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After being informed, the revised limits are supported by 66 per cent of those questioned, up slightly from 64 per cent 12 months ago.

The Financial Services Authority, says in a consultation paper published on 14 December that banks will be required to state that deposits up to £85,000 are protected by the FSCS. They would also have to state that deposits above this amount are not protected.

The draft rules also mean banks that are headquartered in the European Economic Area with branches in the UK will be forced to tell consumers that their deposits are not protected in the same way as with UK banking groups.

They will be forced to openly state that no protection is offered by the FSCS and be obliged to give details of any protection offered within any other national scheme.

Mark Neale, chief executive of the FSCS, said: “As only those financial institutions authorised by the FSA are covered by the FSCS guarantee, it is vital that customers check their financial products are safe and remain within the limit.

“Although the industry has made significant progress in the information it provides to consumers about the FSCS, there is still much more to do.

“What is more, the FSCS can now undertake to return money to most savers in seven days of a failure. So not only will no one lose a penny of protected deposits up to the £85,000 limit, people can also count on getting their money back quickly.”